Traditional and advanced performance and valuation techniques are examined in specific relationship to valuation issues such as behavioral finance, competitive advantage analysis, business strategy, and execution. The course tackles guiding insights for fundamental valuation through Macro theme identification, idea generation, bottoms-up analysis, and asset allocation strategies. Topics covered include (a) Embedded expectations: the single most important concept in fundamental valuation analysis; (b) Relative valuation in an absolute value world: Multiples as DCF heuristics; (c) Breaking valuation biases: Avoiding strategic decision errors from value-creation measurement errors; (d) Themes, Macro, Allocations, and stock-picking: understanding the mega-trends; (e) Why Bruce Lee would have been great at valuation (Yes, that Bruce Lee).
Applications range from corporate finance to investment management to strategic business planning. The course focuses on the link between strategy and valuation – converting qualitative understanding of company initiatives into quantitative forecasts and the ultimate impact on valuation – and the reverse. For this reason, it covers fundamental and quantitative techniques which have been dubbed Quantamental™ linking planning to actions to results to forecasts: (a) When Cash is Not Cash and Why: Rethinking the cash flow statement and ROIs; (b) Competitive Advantage Periods, Fade, and Genuine Assets; in practice, and application; (c) The DuPont Formula: Not the chemicals but the financial drivers. Never margins without turns; (d) Issues in growth: Organic, M&A, Share buyback conundrums; (e) From Fama and French to the quants’ big three: V, Q, and M: What happened August 2007? The content for this course comes directly from actual money managers, including hedge funds and institutional investors, corporate management offices and decisions, and firms servicing them such as brokerages and consulting firms.
Participants will have the opportunity to use proprietary data and technologies from actual firms that are not otherwise readily accessible: (a) Decomposing the capital markets: sell-side, buy-side, consultants, and the company focus; (b) Corporate governance, shareholders, insiders, and valuation impact: strategy over structure; (c) Cross-capital signaling: Incorporating credit and derivative signals in company valuations; (d) Financial Red Flag analysis: ticking time bombs seen in the financials. Participants in this course will leave with a more comprehensive understanding of the capital markets, of what drives valuations, and improved decision-making. It is applicable to both managers driving performance or investors valuing that performance. Business leaders taking this course will have a greater understanding of what drives stock prices, and what matters most in strategic decision making.