Book Description
The treatment in Analysis of Equity Investments: Valuation is intended to communicate a practical equity valuation process for the investment generalist. Unlike many alternative works, the book integrates accounting and finance concepts, providing the evenness of subject matter treatment, consistency of notation, and continuity of topic coverage so critical to the learning process.
The book does not simply deliver a collection of valuation models, but challenges the reader to determine which models are most appropriate for specific companies and situations. This book contains many real-life worked examples and problems with complete solutions. In addition, the examples and problems reflect the global investment community.
Chapter 1 describes how an analyst approaches the equity valuation process.
Chapter 2 begins with the basic John Burr Williams dividend discount model (DDM) and discusses the derivation of the required rate of return within the context of Markowitz and Sharpe's modern portfolio theory (the capital asset pricing model).
Chapter 3 shows how the DDM approach can be modified to a free cash flow (FCF) approach. Considerable attention is devoted to forecasting FCF and its relationship both to the firm (FCFF) and to equity (FCFE).
Chapter 4 takes a somewhat different approach to equity valuation by using Graham and Dodd-type concepts of earning power and associated "Market Multiples." The most familiar of these is probably the price-to-earnings ratio, but there is also merit to using price to book value, price to sales, price to cash flow, enterprise value to EBITDA, and price to dividends.
In Chapter 5, the authors present residual income models. The authors demonstrate how to calculate residual income and discuss the accounting adjustments necessary to estimate single-stage and multistage residual income valuation.
Customer Reviews:
Must-have reference for students!.......2007-07-26
As an undergraduate Finance student prepping for the C.F.A. exam, I must say this is the best textbook I have seen on valuing equities. Clearly written by experienced C.F.A.'s, this guide to valuation has been more helpful and easier to use than any of the textbooks used in my finance classes.
It is well organized, making it easy to read as a single pass-through and to use as a reference for specific topics. The best thing about its writing style is the plentiful examples. Pages of practice problems and step-by-step demonstrations leave the reader with no misunderstanding of the material.
Some important topics covered include methods of valuation (discounted dividend, discounted cash flow, multiples, and the less popular residual income), methods of obtaining discount rates/required return, and other helpful information such as how analyst research reports are structured. Each topic is covered in great detail, encompassing just about every aspect an analyst should know and more. Do not expect to remember everything - I suggest building your own spreadsheet models using this book as a reference to help reinforce the information.
If you are a college student or studying for the C.F.A., this is a necessary book to have in your arsenal. If will provide clarity where other books do not suffice.
Book Description
Applied Equity Analysis treats stock valuation as a practical, hands-on tool rather than a vague, theoretical exercise—and covers the entire valuation process from financial statement analysis through the final investment recommendation. Its integrated approach to valuation builds viable connections between a firm’s competitive situation and the ultimate behavior of its common stock. Techniques explained include EVA, newer hybrid valuation techniques, and relative multiple analysis.
Download Description
Applied Equity Analysis treats stock valuation as a practical, hands-on tool rather than a vague, theoretical exercise--and covers the entire valuation process from financial statement analysis through the final investment recommendation.
Customer Reviews:
great book for those in finance.......2006-06-20
This book is great if you're in the field of finance. This is not for the average consumer looking for investment advice. I've been in corporate financial planning and analyis for the past five years and always wondered how equity analysts built their models. This books will give you insight into their thinking and also give enough detail to build your own models. I would have rated it five stars if the book included a CD with his examples in Excel. The author does have website where you can download sample models.
for SELL-SIDE analysts only.......2006-01-14
I bought this book based on the strong reviews as a complement to Damodaran's classic on valuation, but felt disappointed.
To qualify my comments: First, I am not a sell-side analyst, and secondly, I haven't finished the book. After about 50 pages, I threw in the towel.
My first stylistic objection to the book is its low content density. There is tremendous repetition and examples are trotted out in excruciating detail, even where the conclusions are fairly obvious. For example, on p. 34: "At competitive equilibrium, the firm can identify no incremental investment opportunities likely to generate returns in excess of capital costs. Competitive equilibrium is often defined as a condition in which investment opportunities generate returns equal to capital costs, but existing investments continue to earn abnormal rates." To me these two sentences are already redundant. But in case you still didn't get it, further DOWN on the SAME PAGE: "...This situation is called economic equilibrium, or economic parity. What does equilibrium mean? When returns are forced down to capital costs, then economic rents and/or abnormal earnings disappear and no further incentive to enter the business exists".
But the most frequently repeated point of the first two chapters, is best summed up on p. 19: "As I say many times in the coming pages [and he's not kidding, there], equity analysis is not prophecy; it's opinion. It was never meant to be objective description, but it is strong advocacy." If you're the sell-side analyst, having to "dress up a pig" to help your firm gain some banking business, this book might offer some ideas. But where does this leave the consumer of such analysis? "It's the investor's job to 'diversify' by considering a variety of analysts' positions." (p.9)
I think better advice for the investor might be to learn how to perform sound analysis themselves. For that, I recommend Damodaran's book. I lost my faith in this book's intent to provide balanced (let alone predictive) analysis.
One of the Best.......2005-11-01
There are reams and reams of investment valuation books on the market -- that is obvious.
In my opinion, the three no one should be without are Applied Equity Analysis, Stephen Penman's monster tome "financial statements and...", and lastly, Aswath Damadoran's book, "investment valuation."
Most hyperventilating MBAs default to Damadoran; I really enjoy the simplicity behind Applied Equity Analysis.
Caution: Neither of the 3 are what you'd call "light reading."
If you have any money left, honorable mention goes to Cooke's "security analysis on wall street."
Probably the best.......2004-07-15
I've been looking for a practical step by step book on equity analysis from a practitioners viewpoint. This is it. Other books try to take shortcuts. This book does not take short-cuts, but neither is it bogged down with unncessary academic exercises. If you really want to understand how to do valuation and applied equity analysis I can't recommend any book more highly. It is head and shoulders above anything else out there. Penman's book (from Columbia Business School) is also good but it is a VERY serious and weighty book that probably should only be attacked after you have read this one. Get this book by English and you will not be sorry. I have spent way too much time reading hundreds of other books that weren't nearly as educational. Again, however, it is only for the serious investor.
Very readable, very insightful, and extremely practical.......2001-09-23
James English's "Applied Equity Analysis" is a how-to manual on evaluating stocks based on his 20 years of experience at JP Morgan. The book is very well-written and readable since the author employs plain english (no pun intended) to make his three major points: 1) accounting numbers--while by no means perfect--are excellent tools in evaluating stocks, 2) accounting-based stock valuation is superior to (but does not neccessarily supplant) cash flows, and 3) competition ensures that eye-popping financial performance doesn't last forever.
Contrary to another reviewer, English employs excellent examples to clarify and explain his points. Some examples: Gateway 2000's earnings history was used to explain how to find and interpret non-recurring items (NRI) on financial statements. Ratio analysis was demonstrated by looking at the PC industry in 1998. Emerson Electric was the company chosen to show why mature companies were still good buys. Many other examples abound, and English does a successful job in tying their relevance to his arguements.
But successful use of examples is not just the only strength of the book. The author also tackles a range of topics complete with insightful and clear discussions: the flaws of the Efficient Market Hypothesis (EMH), Economic Value Added (EVA), financial statement analysis, fundamental analysis, etc.
A quick glance at the table of contents below gives you an idea of the scope of English's book. I highly recommend this book to not just Wall Street analysts, anyone who is interested in finding fundamental value in evaluating stocks instead of following the crowd.
Pt. 1 Getting Started
Ch. 1 A Day in the Life
Ch. 2 Fundamentals of Equity Valuation
Ch. 3 Strategy and Competition I: The Firm's External Environment
Ch. 4 Strategy and Competition II: The Firm's Internal Competitive Resources
Ch. 5 Fundamentals of Stock Behavior
Pt. 2 The Basic Tools
Ch. 6 Reading a Financial Statement: The Accuracy, Sustainability, and Predictability of Financial Information
Appendix 6-1 Gateway Financial Statements
Ch. 7 Reading a Financial Statement: the Composition of Returns
Appendix 7-1 Comparative Financial Analysis: Personal Computer Industry
Ch. 8 Reading a Financial Statement: Early-Stage Companies and Investment Capacity
Ch. 9 Reading a Financial Statement: Later-Stage Companies and the Transition to Maturity
Ch. 10 Economic Value Added: An Alternative to Traditional Analysis Techniques
Appendix 10-1 Gateway's Cost of Capital
Pt. 3 Financial Models
Ch. 11 Financial Modeling: Base Case Assumptions and Model Design
Appendix 11-1 Dell Computer Corporation Consolidated Statement of Income
Ch. 12 Financial Modeling: The Income Statement and Balance Sheet
Ch. 13 Financial Modeling: The Statement of Cash Flows
Pt. 4 Equity Valuation
Ch. 14 Valuation: Foundations and Fundamentals
Ch. 15 Combat Finance: Relative Methods and Companion Variable Models
Ch. 16 Hybrid Valuation Techniques
Ch. 17 The Quirky Price/Earnings Ratio
Ch. 18 Valuation of Speculative Stocks
Ch. 19 Equity Analysis and Business Combinations
Pt. 5 Getting It Down on Paper
Ch. 20 Financial Writing: Don't Bury the Lead
Bibliography
Index
Book Description
"Here is an essential tool for the investor: clear, practical, insightful, and concise. This book should have a long, useful life in a professional's library."
—Jeffrey P. Davis, CFA, Chief Investment Officer, Lee Munder Capital Group
"This book provides a clear, comprehensive overview of equity valuation concepts and methods. It is well suited for finance practitioners who want to strengthen their understanding of equity asset valuation and as a supplemental reading in advanced undergraduate and graduate courses addressing security analysis and business valuation."
—Professor Robert Parrino, CFA, PhD, Department of Finance, Red McCombs School of Business, The University of Texas at Austin
"CFA Institute has done it again. This will be a 'must' reference book for anyone serious about the nuances of equity investment valuation."
—Robert D. Arnott, Chairman, Research Affiliates
"Equity Asset Valuation concisely and clearly explains the most widely used approaches to equity evaluation. In addition to thoroughly explaining the implementation of each valuation method, there is sophisticated discussion of the commonsense financial economics and accounting issues underlying the methods."
—David Blackwell, Head and RepublicBank/James W. Aston Professor of Finance, Mays Business School, Texas A&M University
Customer Reviews:
An important reference book in CFA curriculum.......2007-04-10
It is an extremely important reference book because I am preparing for CFA Level II exam. I've found the book an introductory one to illustrate basic concept in investment industry. Any one who wants to enter the investment banks,mutual funds,asset manangement corps. should have this book in hand.
I strongly recommend it to all candidates on the road to getting CFA charter, and other partitioners in investment field may also find it helpful.
Book Description
Convertible securities, combining aspects of both stocks and bonds, truly create a "best of both worlds" investment. This instructive book uses everyday terms and illustrations to explain types of convertibles, reveal high-return investment strategies, and decode pricing, hedging, and risk/return considerations.
Customer Reviews:
Content free.......2003-11-10
To even to most junior quant, this book would be content free. What's more, he promises the revolutionary new Calamos valuation method (now, not even Nobel prize winners name their theories after themselves, they let other people do it for them, so already, suspicion) but again, nothing, just some snapshots from the screen of his software. The book blurb is misleading, it actually promises the method, not just an advert for it. Do not buy this book, you will learn nothing.
Converted to Convertibles.......2003-03-01
Upon reading this book I realized what I was missing from my portfolio. Investing in convertible over the past 3 years has enabled me to keep my head above water since the market peaked back in 2000. My portfolio was only down 4% in 2001 and 5% in 2002 because of the addition of converts.
Author's Conflicted Intentions Evident.......2000-09-09
The table of contents and size of this book suggests a real winner, perhaps even a Graham & Dodd treatment of the convertibles arena. The wonder is how such a long-winded tome can leave the convertibles student so wanting. The book's problem is probably the author's conflicted intentions: "Do I want my readers to go out and find some nice convertible bonds, or do I want them to pay me to go find them some nice convertible bonds?" Guess who gets short shrift?
The introduction to convertibles section is reasonably well written. But the analysis and strategy sections of the book are suspiciously hazy. I say " suspiciously " because the book's author delivers just enough information so one might be comfortable handing over portfolio management to the author's investment management firm, but not nearly enough to implement a portfolio for oneself. Even Calamos' simple price model is insufficiently described.
Thus, after a windy, winding road of nearly 400 pages, CONVERTIBLE SECURITIES reads as a mediocre introduction to convertibles imbedded within an advertisement for the Calamos firm (for which I had to pay $65!).
A Pedestrian Discourse on an Interesting Topic.......1999-06-03
This book's jacket promises "The Latest Instruments, Portfolio Strategies, and Valuation Analysis." A pretty tall order which, not surprisingly, this book does not deliver, in my humble opinion.
I found the analytical sections particularly incomplete and essentially unusable.
Convertible securities combine the appeal of simplicity with the opportunity for serious quantitative analysis. When this book deals with the simple ideas, it does ok. When it ventures into quant-land, I found the short-comings unbearable.
I am sorry to have such a negative opinion. Perhaps other, more enlightened, readers will find redeeming attributes in this book that excaped me.
Basics, History, Develops Strategies, Pricing models.......1999-01-25
Calamos begins by describing the convertible securities markets underpinnings, both historically and fundamentally. Then, the reader's understanding is developed through dissecting many common convertible securities' structures, when and why they came to market, and their benefits to investors, their issuers, and the investment bankers that brought them to market.
To close, Calamos identifies the issues with investing in convertibles including those concerning: pricing, liquidity (retail vs. institutional), hedging strategies (when so desired by the investor), some discussion of portfolio mixes, and comparisons to major market and custom indices to demonstrate convertible security market performance.
This book was a tremendous help as fundamental underpinning for my own education into convertible securities. The pricing models for the components of convertible securities were alone worth the purchase of the book. Comparing and contrasting the several convertible securities discussed also went a long way to understanding their drawbacks and strengths.
Personally, I felt that the opportunity to expand the book further exists in a couple of areas. First, the convertible hedging strategies were my highest interest in obtaining the book, but I felt that they were left with a shorter than necessary analysis. Only one or two real-life examples were given, and the decision-making criteria of a hedging strategy vs. bond's (relative) price seemed to need more expanded discussion.
Second, the descriptions of the marketplace for these securities was left only at a high-level. In defense of the marketplace description, it's clearly an institutional, dealer-driven market that would probably require another edition to describe that market's inner workings. Perhaps that's a worthy follow-up, Mr. Calamos. "The Mechanics of the Institutional Convertible Securities Markets"??
BUY this book. Calamos' years of experience are clearly demonstrated within the chapters. This is not one of those meritless, sham investment books so often written solely to benefit the author. This is a quality educational tool and long-term reference.
Book Description
A practical guide to proactive investor relations (IR)
Investor relations (IR) has traditionally been an administrative function within corporate communications, responsible for disseminating public information and answering investor and media questions. Using Investor Relations to Maximize Equity Valuation challenges this approach, by arguing that IR has been underutilized and then illustrating how it should be elevated to lead a strategic communications effort to preserve or enhance corporate value and lower a company's cost of capital. Divided into four comprehensive parts, this book clearly describes capital markets strategies and tactical operations that these former, senior-level equity analysts and portfolio managers employ.
Chad A. Jacobs (Westport, CT) and Thomas M. Ryan (Westport, CT) are the cofounders and co-CEOs of Integrated Corporate Relations.
Download Description
A practical guide to proactive investor relations (IR)
Investor relations (IR) has traditionally been an administrative function within corporate communications, responsible for disseminating public information and answering investor and media questions. Using Investor Relations to Maximize Equity Valuation challenges this approach, by arguing that IR has been underutilized and then illustrating how it should be elevated to lead a strategic communications effort to preserve or enhance corporate value and lower a company's cost of capital. Divided into four comprehensive parts, this book clearly describes capital markets strategies and tactical operations that these former, senior-level equity analysts and portfolio managers employ.
Chad A. Jacobs (Westport, CT) and Thomas M. Ryan (Westport, CT) are the cofounders and co-CEOs of Integrated Corporate Relations.
Customer Reviews:
Consultants explain investor relations.......2006-07-04
Authors and consultants Thomas M. Ryan and Chad A. Jacobs, cofounders of an investor relations consultancy, provide a basic introduction to the ways of Wall Street that will be useful to new staffers in investor relations (IR) departments, or to companies that are deciding how to handle IR. The most valuable part of the book comes in chapter 20, where the authors offer companies a good guide to handling earnings releases and stock analysts' conference calls. The least valuable part is the oft-repeated advice to companies that they should hire investor relations consultants - like the authors. We suggest this book to companies that are defining their investor relations function.
Book Description
Revised and updated to reflect the latest thinking in the area of cash flow analysis, Cash Flow and Security Analysis, is written with the underlying assumption that cash flow analysis is the most important tool at the investor's disposal. You will discover why cash flow is quickly replacing earnings as the primary tool among securities analysts and how they can identify undervalued securities using cash flow analysis. This important reference shows you how to avoid common costly mistakes.
Customer Reviews:
Best Investing Book I Have Ever Read.......2002-07-22
This book lays the foundation for making money in the markets. It is clear and to the point. The only book you really need.
UP 45% LAST YEAR THANKS TO THIS BOOK!!.......2000-08-12
I'VE COMPLETELY AVOIDED THE INTERNET HIGHFLYERS-THEY DON'T GENERATE FREE CASH FLOW. ON THE OTHER HAND THE BOOK PUT ME INTO COMPANIES WHOSE UNDERVALUED STOCKS QUICKLY TURNED AROUND WITH THERE LOW DEBT HIGH FREE CASH FLOW. I PARTICULARLY LIKED THE WAY THE AUTHORS LOOK AT CORPORATE FAT
Not Helpful.......2000-02-07
I re-read sections of this book on cash flow analysis and found it much less useful than 5 years ago when I read the first edition. The market does not care anymore about smaller high free cash flow and low debt companies.
I've made 33% a year by buying growth stocks!.......1999-08-03
I buy growth stocks - not small to mid-cap deep value basic industry cyclicals. Buy Growth not Value! FREE CASH FLOW ANALYSIS DOES NOT WORK ANYMORE!
I'VE AVERAGED 27% PER YEAR DUE TO THIS BOOK.......1999-07-24
I BOUGHT THIS BOOK 5 YEARS AGO. WHILE I MISSED OUT ON MANY STOCKS THAT DOUBLED, I ALSO ESCAPED STOCKS THAT FELL IN HALF-OR MORE. I HAVE TURNED IN VERY CONSISTANT RETURNS OVER A LONG PERIOD OF TIME-WHAT'S WRONG WITH 27% PER YEAR?
Book Description
Financial Analyst’s Indispensable Pocketguide is the first reference to give the more than 20,000 candidates who take AIMR-administered CFA exams annually—and the 60,000-plus CFAs and finance professionals who currently practice investment management—a single broad-based resource for specific terminology and information. Much more than just a dictionary, this dynamic book explains and expands upon the fundamental concepts that comprise a financial analyst’s lexicon.Within each section, Ramesh arranges fundamental terms alphabetically, then provides CFA-related tips and profiles of industry leaders. Key topics include:
*Timeless tips for CFA candidates and practitioners
*Graphics and mnemonics to help with important concepts
*Derivatives, equity valuation, and portfolio management
Customer Reviews:
I recommend !.......2007-05-14
It is a very practical guide for handy information. It is quite usefull for my daily work needs.
Useful overview, but not perfect.......2001-06-14
I'm not a CFA candidate, but I've been an investor for years and always appreciate learning more about the field. My father was president of the CFA for a couple of years, and after 15 years working on Wall Street I have a reasonably broad understanding of some finance.
What impressed me most about the book was how short and terse the definitions were. Clearly they are useful and present good insight into what's important and why.
What impressed me least was the lack of mathematical rigour (perhaps one can't have both brievity and exactness?). For example, many of the formulas only work for specific instances, and details about yield/rate conventions are omitted.
Overall, it struck me as useful overview and quick reminder to financial analysis and the language/terms used. It's not really indispensable, and is not authoritative. But for a quick refresher, or ballpark estimates it's fine.
A great book for those studying or who've completed the CFA.......2001-05-13
This is the only book of its kind, so far. The author compiled this pocket guide after completing his CFA program and realising that the vast concepts, terms and designations learnt were soon being forgotten.
That being the case, candidates of, as well as those who have completed, the CFA program would find this book a useful one-stop guide to all those concepts, terms and designations learnt in the pursuit of the CFA designation.
The book is arranged broadly around the various topics of the CFA program i.e. Quantitative Methods, Economics, Financial Statements Analysis, Equities, Fixed Income, Derivatives, Real Estate, Portfolio Management, Ethics, Behavioural Finance. As such, the CFA candidate would find this book more useful than say, a general finance/business masters student.
But I reckon that this book, though published as recent as this year, is already in need of an update. The CFA syllabus is constantly evolving. As a result, a number of concepts in say, Level 1 of the CFA Program, are not found in this book. Also, a number of the textbooks used in the CFA program which the author had based his book on, have either been superseded by newer editions or replaced all together.
All in all, I found this to be a useful book and a unique concept. Until a better book comes along, I will be using this book religiously to prepare for the CFA exams as well as to refresh my memory.
Good starting point.......2001-04-02
As a CFA candidate, I find this to be a useful summary of the key concepts that we are taught during the course of the programme. However, regard it as more of a "Cliff's Notes" of the programme -- with all its inevitable shortcomings -- but a handy little reference piece nonetheless. After completion of the programme and years down the road, I am sure that I will find it quite useful in helping to jog my memory and the sleepless nights that the CFA programme gave me! -- I hope, however, that a revised version will be introduced and perhaps with a less odd title. It is not a book for everyone, but anyone who wishes that s/he had made notes whilst studying for the CFA programme will find this book useful.
Product Description
Security analysts, investors, and investment managers have a vital need to understand the financial theories, analytical models, and value-enhancing tools that corporate managers are using. This proceedings uses the fundamental issues of how firms add value and how analysts measure value as a platform from which to explore the variety of theories, models, and tools that have emerged in research and practice. Proceedings of the AIMR seminar "Equity Analysis: The Role of Corporate Financial Decision Making"
Average customer rating:
|
Equity Markets and Valuation Methods
Gary G. Schlarbaum ,
Robert L. Hagin ,
Barr Rosenberg ,
Meir Statman ,
Kenneth N. Levy Bruce I. Jacobs ,
Jeffrey L. Skelton ,
H. Russell Fogler ,
Preston W. Estep ,
Eric H. Sorensen , and
Dean LeBaron, Wayne H. Wagner, Michael L. McCowin Paul H. Aron
Manufacturer: AIMR (CFA Institute)
ProductGroup: Book
Binding: Paperback
 Public Finance
| Economics
| Business & Investing
| Subjects
| Books
General
| Business & Investing
| Subjects
| Books
General
| Investing
| Business & Investing
| Subjects
| Books
ASIN: 0935015051 |
Book Description
Developments in equity securities markets have forced many investors to rethink their equity investment strategies. This proceedings addresses the expanding concept of market efficiency as well as the development of investment strategies that attempt to take advantage of apparent market inefficiencies.
Books:
- Balanced Scorecard
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- Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant
- Cases and Materials on Torts (University Casebook Series) (University Casebook Series)
- Contrarian Investment Strategies in the Next Generation
- Cost Accounting: Foundations & Evolutions
- Cost Management: Accounting and Control
- Deal Terms - The Finer Points of Venture Capital Deal Structures, Valuations, Term Sheets, Stock Options and Getting VC Deals Done (Inside the Minds)
- Diversify Your Mutual Fund Portfolio : Morningstar Mutual Fund Investing Workbook, Level 2
- Essentials of Investments with Standard & Poor's Bind-in Card
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