This 26-session equity valuation class will be starting February 4, 2019, and the lectures are accessible in multiple ways. You can get the supporting lecture notes by clicking on the pdf files below - the pages covered by each lecture are provided next to each lecture. For the syllabus and other details, visit the home page .

Lecture Notes

Webcasts

Options for following class

You can follow this class in other forums. One is iTunes U, where you can watch the webcasts and follow the class on your tablet or even smartphone. The other is YouTube.

Finally, you can read the emails that I send to the class by this link.

Session Webcasts Topics covered Lecture notes

Preview of the class What is this class about?

Post-class test and solution.

The Bermuda Triangle of Valuation

Intrinsic Valuation: The Big Picture

Relative Valuation: The Big Picture

First Steps in Intrinsic Value

Post-class test and solution.



Getting Data for Valuation Valuation Tools Webcast #1 Data collection: The first step

In this webcast, I look at the basics of getting the raw material needed for valuing a business - financial statements, sector information and macro economic data. SEC website

SEC Live

FRED (Federal Reserve)

DCF Big picture

DCF inputs: The Discount Rate

- Setting the table

- Risk and the marginal investor



Post-class test and solution.

The Risk free Rate The Equity Risk Premium

- Historical Risk Premiums

- Country risk premiums & measuring exposure

Post-class test and solution.

Weekly Challenge #1 Reconciling firm and equity valuation Weekly challenge #1

Solution



Downloadable webcast

YouTube Valuation Tools Webcast #2 Much of the raw material (data) that we use for valuation comes from annual reports and financial filings. (10, 10Q). In this presentation, I lay out a template for extracting information from these filings, separating the stuff that matters from the stuff that does not, using P&G in September 2012 as an illustration. Presentation P&G: 10K P&G: Valuation (Excel spreadsheet)

Country Risk and Company Risk Exposures

Implied Equity Risk Premiums

- More on estimation

- Interaction with other "risk" premiums

First steps on betas

Post class test and solution

Weekly Challenge # 2a Implied Premium versus Riskfree Rate Implied premium challenge, data and solution



Estimating a risk free rate Valuation Tools Webcast #3 Estimating a risk free rate



Estimating a risk free rate should be simple but it is often not. In some currencies, where there are no default free entities, it may take some work getting to a risk free rate. In this webcast, I look at the mechanics of this adjustment. Presentation Moody's ratings (3/13) CDS spreads (3/13)

Measuring Relative Risk (Betas & Alternatives)

The cost of debt

Post class test and solution

Subsidized Debt

Earnings and cash flows

- Updating earnings

- Cleaning up earnings





Post class test and solution

Accounting Fraud & Negative Earnings

Tax Rates

Reinvestment

From FCFF to FCFE

Leverage and FCFE

Growth rates

- Historical growth rates

Post class test and solution

Historical Growth Rates

Analyst Estimates of growth



Fundamental growth rates

- Efficiency growth

- Growth when margins are changing

Terminal Value: Constraining Rules

Post class test and solution

Picking a DCF Model

Loose Ends in Valuation

- Valuing Cash

- Valuing Cross Holdings

- Valuing Other Assets

- Dealing with Complexity





Post class test and solution

Weekly Challenge #4a Terminal Value Weekly challenge

Solution

Valuation Tools Webcast #9 (Checking Terminal Value) The terminal value is a "big" number in DCF valuation, but it is subject to misuse and manipuluation. In this session, I take a look at how you can detect problems with a terminal value computation (in both your own DCFs and in other people's DCFs) Sample DCF valuation

Terminal value analyzer

Valuation Tools Webcast #10: Dealing with Employee Options When companies compensate employees with options, they create a second claim on equity. When valuing common shares in these companies, you have to incorporate the effect of options outstanding on equity value and I try to look at how in this webcast. Cisco 10K

Option spreadsheet

Debt & Legal Jeopardy

Dealing with Employee Options & Restricted Stock

Narrative and Numbers

Post class test and solution

Changing your story

Valuing a stable growth, dividend paying company

Value and Macro Changes

Post class test and solution

Weekly Challenge #5 Management Options and Equity Value Weekly challenge

Solution & Option value

Valuing young companies & start-ups

Valuing mature companies in transition

Valuing declining & distressed companies

Post class test and solution

Valuing young companies & start-ups

Valuing mature companies in transition

Valuing declining & distressed companies

Post class test and solution

Valuing Companies with Intangible Assets

Valuing Commodity Companies

Value versus Price

The Essence of Pricing

Multiples, Standardized Pricing

The Allure of Pricing

Defining & Describing Multiples

Analyzing Multiples

Post class test and solution

Weekly Challenge #6 Multiple: Definitional test Weekly Challenge

Solution

Defining comparable firms

Controlling for differences

Pricing examples

Post class test and solution

More pricing examples

Closing thoughts on relative valuation

Asset Based Valuations



Post class test and solution

Weekly Challenge #7a Relative valuation Weekly challenge

Solution

Weekly Challenge # 8 Relative Valuation versus DCF valuation Weekly challenge

Solution

Valuing Private Businesses

- Diversification & Total Betas

- Key Person Discount

- Initial Public Offerings





Post class test and solution

The Essence of Real Options

Tests for Real Options

The Option to Delay

Post class test and solution

Weekly Challenge #9 Patent valuation Weekly Challenge

Solution

Valuation Tools Webcast #13: Valuing Patents as Options The exclusive rights to produce a product or provide a service can provide the owner with "optionality", allowing for a premium on top of a discounted cash flow value. In this webcast, I look at a simplified example. Presentation Spreadsheet

Real Options

The Option to Delay

- The Option to Expand

- The Option to Abandon

Post class test and solution

The value of financial flexibility

Equity as a liquidaiton option

- Setting up the option

- Implications

- Extending to the real world

- Implications for distressed investing

M&A Introduction

Post class test and solution

Acquisition Valuation

- Common valuation errors

- Synergy & Control

- Ego & Value

- Improving the odds

The InBev/SABMiller Deal

Post class test and solution

Value enhancement

- Price versus Value Enhancement

- Ways of enhancing value

- The expected value of control

- Implications

Post class test and solution

Closing Presentation

- Dante meets DCF (Ten tests of valuation)

- Project findings

- Closing thoughts