Robert A. G. Monks, Alexandra Reed Lajoux

Corporate Valuation for Portfolio Investment (eBook, PDF)

Analyzing Assets, Earnings, Cash Flow, Stock Price, Governance, and Special Situations

• Format: PDF

Produktbeschreibung

A detailed guide to the discipline of corporate valuation Designed for the professional investor who is building an investment portfolio that includes equity, Corporate Valuation for Portfolio Investment takes you through a range of approaches, including those primarily based on assets, earnings, cash flow, and securities prices, as well as hybrid techniques. Along the way, it discusses the importance of qualitative measures such as governance, which go well beyond generally accepted accounting principles and international financial reporting standards, and addresses a variety of special situations in the life cycle of businesses, including initial public offerings and bankruptcies. Engaging and informative, Corporate Valuation for Portfolio Investment also contains formulas, checklists, and models that the authors, or other experts, have found useful in making equity investments. * Presents more than a dozen hybrid approaches to valuation, explaining their relevance to different types of investors * Charts stock market trends, both verbally and visually, enabling investors to think like traders when needed * Offers valuation guidance based on less quantitative factors, namely management quality and factors relating to the company and the economy Corporate Valuation for Portfolio Investment puts this dynamic discipline in perspective and presents proven ways to determine the value of corporate equity securities for the purpose of portfolio investment.

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Produktdetails

• Verlag: John Wiley & Sons
• Seitenzahl: 576
• Erscheinungstermin: 6. Oktober 2010
• Englisch
• ISBN-13: 9780470880746
• Artikelnr.: 37299741

Autorenporträt

Robert A. G. Monks is a pioneering institutional shareholder activist. He founded Institutional Shareholder Services and the LENS Fund, and was chair of the Boston Company. He was a pension administrator in the Department of Labor and was a founding trustee of the Federal Employees Retirement System. Monks is the author or coauthor of a number of books; his most recent are Corpocracy and Corporate Governance, both from Wiley. Alexandra Reed Lajoux is Chief Knowledge Officer at the National Association of Corporate Directors (NACD). She has been an editor for Directors & Boards, Mergers & Acquisitions, and NACD's Director's Monthly. Lajoux is the author or coauthor of several books on mergers and acquisitions and received her PhD from Princeton University.

Inhaltsangabe

Foreword (Dean LeBaron). Preface. Acknowledgments. 1 Corporate Valuation
for Portfolio Investment: A Philosophical Framework. Valuation Defined. The
Importance of Equity. Equity Defined. Articles of Faith Undermined:
Securitization at Risk. Benefits of the Equity Marketplace. The Flexible
Nature of Equity Capital. Long-Term Superiority of Equity over Debt--with a
Caution about Volatility. The Focused Nature of Valuation for Investment.
Two Main Sources of Information about Equity. Financial Reports: Issues
with GAAP and IFRS/IAS. Sources of Complexity in Accounting for Company
Value. Reforming GAAP and IFRS. The Problem of Fair Market Value: Reporting
Values for Securities with No Current Market. Three Studies. The Need to
Read between the Lines. Human Nature Complicates (but Also Informs) Equity
Valuation. George Soros's Concept of Refl exivity. Other Paradoxes in
Equity Investing. The Observer Effect. Human Nature as the Key to Equity
Value. Need for Expression in Currency Values. On Financial Mathematics. In
Closing: About This Book. A Range of Approaches. 2 Valuation Based on
Assets. Overview of Assets as a Unit of Valuation. An Opening Caveat: The
Limitations of Accounting Numbers. Accounting Numbers: Why Assets as a
Starting Point? Definition of an Asset. Flow-Dominant vs. Value-Dominant
Assets. The Market Premium and Nonmarket Discount. Bear Stearns: A
Cautionary Tale. The Asset-Focused Investor. Current Asset Value. Taking
Clues from Assets. The Sykes Model. Beyond Assets: Clues from Liabilities
and Equity on the Balance Sheet. The Role of the Appraiser and Appraisal
Standards in Valuing Assets. Fair Market Value Treatment Assets. Fair Value
of Assets under FASB (GAAP) and IASB (IFRS). Valuing Intangible Assets on
the Balance Sheet. Valuing Intangible Assets That Are Not on the Balance
Sheet. Using the MD&A for Insights on Assets. Improvements in Fair Value
Disclosures: A Checklist for Investors. Asset-Based Valuation by Industry.
Special Topics in Asset Valuations: Valuing Assets in Pension Plans. Lens
Check. Conclusion: Asset Values in Bailouts. Appendix 2.1: Common Ratios,
Multiples, Averages, and Algorithms Based in Assets--and Examples of Their
Use. Appendix 2.2: Asset-Based Approach to Business Valuation (American
Society of Appraisers). 3 Valuation Based on Earnings (Income). Earnings
Defined. Types of Earnings. Operating Earnings Are Key to Value. Earnings
Are Relative to Revenues and Expenses. Earnings Are Ultimately Based on
Assets. Hard Times Reveal Earnings-Asset Connection. How the Standard
Setters Currently Define Earnings. A Brief Pause to Look at Our Compass.
The Other Side of the Equation: Revenues Minus Expenses. How XBRL Can
Connect the Dots between Earnings and Assets. Earnings Management and
Fraud. Earnings Caveat from a Sage. The Quality of Earnings. Models to
Assess Earnings. Earnings Guidance: A Waning Trend? Consensus Earnings
Programs. Earnings Examples. EPS: An Emerging Standard. Earnings-Based
Valuation by Industry. Impact on Industries of New Global Accounting
Standards for Revenue Recognition. Is a New Earnings Measure Needed? Lens
Check. Conclusion. Appendix 3.1: Hoover's Definitions of Basic Income
Statement Terms. Appendix 3.2: Ratios and Other Valuation Indicators Using
Earnings. Appendix 3.3: Net Income Example. 4 Valuation Based on Cash Flow.
Cash Flow Statements--Something Old, Something New for Investors. Value and
Liquidity. Cash Flow: What the Global Standard Setters Say. What the Cash
Flow Statement Shows. Accounting Note: Converting an Indirect Method
Statement of Cash Flows to a Direct Method. DCF: Projecting Future Cash
Flow. Crystal Ball: Two Kinds of Questions. Some General Methodologies for
Considering Cash Flow. Cash Flow from Projects: What Investors Should Know.
The Work of Alfred Rappaport. Using Monte Carlo Simulations for Future Cash
Flow Estimates. Using Cash Flow to Calculate Amortized Cost. IFRS Impact on
Cash Flow. Cash Flow Patterns in Industries. Lens Check. Conclusion.
Appendix 4.1: AT&T Example. Appendix 4.2: ASC 230 Summary. Appendix 4.3:
Summary of IAS 7. 5 Valuation Based on Securities Prices. Overview of
Securities Prices. Definition of Stock Price. Seven Basic Points of
Departure to Determining the Value of a Security. Approach 1: Ratios or
Formulas That Include Stock Prices. Approach 2: Technical Analysis of Stock
Price Movements. Approach 3: Analysis of Values According to Efficient
Market-Random Walk Hypothesis. Approach 4: Stock Valuation Based on
Expectations. Approach 5: Valuations Implicit in Algorithmic Trading.
Approach 6: The Black Swan Approach to Stock Price Valuation. Approach 7:
Refl exivity Theory and Stock Values. An Overview of Chaos/Complexity
Theory. Securities Valuation as an Asset on the Balance Sheet. The Duff &
Phelps Valuation Model. Revisiting Mark-to-Market. Can We Bring Back the
Equity Premium? Reconnecting with the Good Old Capital Asset Pricing Model.
Stock Price Patterns in Industries. Lens Check. Conclusion. 6 Hybrid
Techniques for Valuation. Building vs. Buying a Model. A Word about
Building a Model within a Model. Words of Caution. Fourteen Approaches.
Using Metrics to Measure Management. A Basic Distinction: Residual Income
vs. Discounted Cash Flow. Out-of-the-Box, or Generic, Valuation Models.
Reconciling the Balance Sheet and Income Statement. Reconciling the Income
Statement to the Statement of Cash Flows. A New Balance Sheet Metric. Use
of Hybrid Valuation Approaches in a Key Industry: Energy. Concluding Caveat
and a Fifteenth Model. Appendix 6.1: National Standard Company: Description
of Bonus Plan Based on EVA. 7 Market Value Drivers of Public Corporations:
Genius, Liberty, Law, Markets, Governance, and Values. The Nonmarketability
Discount. Six Key Elements. Element 1: Genius. Element 2: Liberty. Element
3: Law. Element 4: Markets. Element 5: Governance. Element 6: Values.
Long-Term Investing. A Note on Valuation for Divestment. Conclusion.
Appendix 7.1: Rating Governance. Appendix 7.2: Enhanced Business Reporting
Framework. Appendix 7.3: The Caux Round Table Principles. Appendix 7.4:
Trucost. 8 Situational Valuation: Equity Values throughout the Corporate
Life Cycle. Scenarios. Valuation of Shares under Public Policy Pressure: A
Story in Medias Res. Valuation of Shares at Par (or No Par). Valuation of
Shares in IPOs and Secondary Offerings. Valuation of Shares upon the
Declaration of a Dividend or a Stock Split. Valuation of Shares in
Buybacks. Valuation of Shares in Companies with Underfunded Defined Benefit
Pension Plans. The Example of Endowments. Valuation of Shares Tendered,
Exchanged, or Retained in Mergers or Acquisitions. Valuation of Shares in
Spin-Offs and Divestitures. Valuation of Shares Impacted by Shareholder-Led
Governance Changes. Valuation of Shares in Companies in the Zone of
Insolvency or Filing for Bankruptcy. Valuation of Shares in Companies
Emerging from Bankruptcy. Conclusion. 9 Conclusion. Need for Humility in
Valuation. A True Beauty Contest. No Single Definition for Valuation. A
Word about Genius. Real Impact. A Need for Investor Talent. Looking for the
Story. On the Social Impact of Corporations and Investors. Work in
Progress. Appendices. A Equity vs. Debt Securities: A Global Definition. B
Basic Accounting Concepts for Corporate Valuation. Summary of Tentative
Global Accounting Decisions on Objectives and Qualitative Characteristics
of Accounting. Accounting Principles: U.S. GAAP. C Convergence of Global
Standards: FASB, IASB, and Their Joint Standards as of June 1, 2010.
Current Technical Plan and Project Updates for Joint FASB-IASB Projects in
2010 and 2011. D Report to the Congressional Oversight Panel Regarding Fair
Value of Certain Securities and Warrants Acquired by the Treasury under
TARP. A. Introduction. B. Engagement Overview and Procedures. C. Valuation
Methodologies Overview. D. Summary of Findings. E. Assumptions,
Qualifications, and Limiting Conditions. Addendum. E The Use of Mathematics
in Finance. Types of Mathematics Used in Corporate Valuation. Statistics.
Histograms. Geometry and Trigonometry. Conclusion. Symbols Used in
Financial Mathematics. F The Modigliani-Miller Theorems. Modigliani-Miller
Propositions. G Uniform Standards of Professional Appraisal Practice
(USPAP). Standard 9: Business Appraisal, Development. H Global Industry
Classification Standard (GICS) Sectors and Industry Groups. I Damodaran
Spreadsheets for Valuation. J Monte Carlo Simulation for Security
Investments. Volatility and Time Horizon Exercise. K Antivaluation! Human
Valuation and Investment Foibles. Some Common Biases in Valuation Choices.
Some Common Fallacies in Valuation Reasoning. Aristotle's 13 Fallacies. L
Fair Value Measurement of Derivatives Contracts. M Final Report of the
Advisory Committee on Improvements to Financial Reporting to the United
States Securities and Exchange Commission. 1. Substantive Complexity. 4.
Delivering Financial Information. N Valuing Values. The Methodological
Challenge. Economic Value and Social Value. Financial Investing vs. Social
Investing Tools. Valuing Values. O XBRL Guidance. What Is XBRL? How Can
Investors in Companies Using U.S. GAAP Locate and Use XBRL Information? P
Pension Fund Valuation Guidance. Q Stock Indexes. R U.S. Business Cycle
Expansions and Contractions. S Wisdom from Norway: Two Speeches from a
Norwegian State Pension Plan Inspire a Long-Term View. From Oil to
Equities: Knut N. Kjær. Investing for the Long Term: Governor Svein
Gjedrem. Recommended Reading on Corporate Securities Valuation. Index.