Valuations – Advanced

If you are studying to be a CA(SA), you can expect quite a few valuations questions to come your way.  It is an area that requires integrated thinking across a range of topics – cost of capital, relevant costing, mergers and acquisitions and strategy.  It is not enough to just crunch the numbers, increasingly SAICA are also asking students to consider the qualitative issues that need to be considered.  Valuations are after all, more art than science.

Make sure that you are comfortable with “The Mechanics” of the various valuations methods.  Click here for the post that explains these.  This post could focus on any number of issues in valuation but I have decided to share with you the sources where I gather information.  Rather than give you fish, I am taking you to the valuation fishermen that are my heroes!

Advanced Maestros

Aswath Damodaran – he is lecturer to the lecturers!  His blog, courses and website are all top class.  Do yourself a favour and invest some time seeing the world through his eyes.  Want to get a feel for just how good this guy is?  Check out his valuation of Apple (with spreadsheet included).

Jae Jun – less well known but an inspiring guy who is always keen to share what he is learning.  He is based in the USA but the ratios he recommends can be used anywhere.  His blog is here.

Sanjay Bakshi  – a lecturer who is greatly inspired by Warren Buffett and Charlie Munger.  He links a lot of his extensive reading into his slides and notes.  Here is his website.

Moneyweb unit trust tool – find yourself not knowing where to start when wanting to research shares?  I like to use this tool as a starting point.  It allows you to see what the Unit Trusts have been buying and selling.  I look for asset managers that I respect, click to see which new positions they have taken in the last few months, and start my research with those companies.

Investopedia – this is not the same as Wikipedia!  This website prepares students for the CFA exams and has high quality information – especially if you come across a term or concept you don’t know.

For those interested, the UCT College of Accounting will be launching a Masters in Accounting to be launched 2017 and that will also be a great place to take your Financial Analyis, Financial Reporting and Risk Management skills to the next level.  I am teaching a few case studies on it – 3G Capital, Amazon v Walmart and African Bank will all feauture.

The best way to learn Advanced Valuations?  Get some money together, value shares until you think you have found one that is undervalued and then buy it.  “Skin in the game” is the best way to learn!

P.S.  Who else should I be learning from?  Please feel free to share your valuation heroes with us.

Paul Maughan

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