AppliedValue

InvestingFall2016

ProfessorArthurT.WilliamsIII
Tele:2127506896
Email:awilliams@ssvfunds.com

ProfessorT.CharlieQuinn
Tele:7175758118
Email:tcquinn@grglancaster.com

Classroom:Uris328
ProfessorOfficeLocation:OffCampus
Officehours:byappointment

REQUIREDCOURSEMATERIAL
Requiredreadingthroughoutthetermincludes:
1.
2.
3.
4.
5.

TheWallStreetJournal
FinancialTimes
Barrons
SECfilingsrelatedtocompanieswearestudying,companycalltranscriptsandotheravailabledata
Theremaybeothershortbooksorarticlesassignedrelatedtospeakersortopicsofinterestasthesemester
progresses.

**Therearenogoodtextbooksforthiscourse.Weassumebecauseyouareinanadvancedsecurityanalysisclassat
Columbiayouhavereadatleastpartsofthefollowingbooks:
Greenwaldetal,GrahamandDoddsSecurityAnalysis,SixthAdditionOR
Cottle,Murray,andBlock,GrahamandDoddsSecurityAnalysis,FifthAddition
GreenwaldandKahn,CompetitionDemystified,ARadicallySimplifiedApproachtoBusinessStrategy
REQUIREDPREREQUISITESANDCONNECTIONTOTHECORE

Prerequisite:CapitalMarkets
AppliedValueInvestingisthepracticeofvaluingbusinesses,apursuitthatwillrequireaholisticapplicationof
conceptsaccumulatedduringyourtimeatColumbiaBusinessSchool.Obviouslyallthevaluationtoolslearned
inCorporateFinancewillbenecessary,butthatisjustthemath.Identifyingtheappropriatemodelinputsis

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theartandwilltouchmostifnotallofyourclassestodate.FinancialAccountingprovidesthelanguageand
GlobalEconomicEnvironmentthesetting.Howwillmacroeconomicgrowthimpactthebusinessathand?Are
revenuescyclicalorcountercyclical?Willarecessionputthefirmsfinancingatrisk?ManagerialEconomics
helpsinformhowabusinessactuallymakesmoney.Whatarethecompetitiveadvantages,ifany?How
sustainablearethey?ClearlylessonsfromStrategyFormulationareneededtovalueabusiness.Howisthe
industryorganizedandwhatisthenatureofcompetition?Ismanagementpursuingthecorrectstrategygiven
theircompetitiveposition?ConstructsfromMarketingStrategyandOperationsManagementwillberequired
toweightherelativestrengthofbrandportfoliosandefficiencyofdistributionnetworks.Insightsfrom
LeadershipDevelopmentwillhelpassessthequalityofmanagementandfirmculture.Simplyput,valuing
businessesisthestudyofbusiness.Pleasefindbelowsomeofthemorespecifictopicscoveredincore
coursesthatyouwillutilize:
CoreCourse
CorporateFinance

FinancialAccounting

GlobalEconomic
Environment

ManagerialEconomics

StrategyFormulation

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ConnectionwithCore
1. CostofCapital
2. Valuation
3. FinancingOptions
4. Timevalueofmoney
5. Opportunitycost(ofcapital)
6. TheCapitalAssetPricingModel(CAPM)
7. FirmValuationModel
1. Theaccountingequation
2. Revenueandexpenserecognition
3. Resourcesandobligationsmeasurementanddisclosure
1. RiskManagement
2. WhatisGrossDomesticProductandhowisitmeasured?
3. Whatcausesinflation?
4. Whatcauseschangesinexchangerates?
5. Whatarethecausesofbusinesscycles?
6. Whataretheeffectsofmonetarypolicy?
7. Whataretheeffectsoffiscalpolicy?
8. Whatistheroleoffinancialmarketsintheeconomy?
1. Barrierstoentry
2. Maximizationandthinkingonthemargin
3. Analyzingcomplexdecisionmakingunderuncertainty
4. Decisionbasedcostanalysis
5. Pricingwithmarketpower
6. Marketsegmentationandotheradvancedpricingstrategies
7. Understandingmarketcompetitionandequilibriumthinking(inthe
shortrun)
8. Marketequilibriumthinking(inthelongrun)andbarrierstoentry
9. StrategicinteractionamongfirmsandNashequilibrium
1. Tradeoffs,valueadded,efficiencies
2. Creationofvaluevs.valuecapture
3. Competingfirms
4. CooptitionandComplementors

5. Strategicinteractionanalysis
6. Diversificationandscope
7. Ethics&IBS
8. Behavioralandevidencebasedstrategy
9. Management
Studentswillbeexpectedtohavemasteredtheseconceptsandbeabletoapplytheminthecourse.
COURSEDESCRIPTION&OBJECTIVES
Thiscoursecombinesthemethodsandteachingsofsecurityanalysiswithpracticalbuysidemethodologiestoidentify
andresearchattractivevalueinvestments.Ideaselectionmethodologiesvarymateriallydependingonscopeof
investmentparameters,industryandsubsector,investmentphilosophyandmarketconditions;severalofthese
approacheswillbediscussedandpracticed.Bothlongandshortmethodologieswillbecoveredduringthesemester.
Thiscoursewillleverageyourtheoreticallearninginsecurityanalysisplusrequireyoutodevelopbusinessacumenand
industryexpertise.Acombinationoffundamentalanalysisandassessmentofintrinsicvaluewillbebalancedwith
thematicthinkingandbusinessjudgment.Thecourseshouldarmyouwiththetoolstoidentifyattractivevalue
investmentsthroughavarietyofmethodologiesforseveralalternativefundstrategies.Throughoutthesemester,
studentswillprepareaseriesofinvestmentmemorandaidentifyingmispricedbusinesses.
Theclasswillbekeptsmalltotakeadvantageoftheinstructionalmethod.Classdiscussionswillbecomplementedby
guestdiscussionsfromhighlyregardedinvestmentprofessionals.
ASSIGNMENTS
Tuesday,September6th,2:15pm5:30pm,Class1:
Tuesday,September13th,2:15pm5:30pm,Class2:
Tuesday,September 20th , 2:15pm5:30pm,Class3:
Tuesday,September27th,2:15pm5:30pm,Class4:
Tuesday,October4th,2:15pm5:30pm,Class5:
Tuesday, October 11th, 2:15pm 5:30pm, Class 6:
Tuesday,November 1st, 2:15pm5:30pm,Class7:
Tuesday,November15th,2:15pm5:30pm,Class8:
Tuesday,November 22nd, 2:15pm5:30pm,Class9:
Tuesday,November29th,2:15pm5:30pm,Class10:
Tuesday,December6th,2:15pm5:30pm,Class11:
Tuesday,December13th,2:15pm5:30pm,Class12:
METHODOFEVALUATION
Theworkloadforthisclasswillbesubstantialinsizeandtime.Ifyouarenotpreparedforthiscommitment,theclasswill
notbeenjoyableforanyofus.Therewillbereadingsandassignmentseachweekandyouwillbeexpectedtohandin
writeupsfortheseassignments.

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Weeklyassignmentsshouldbeemailedtousbefore12:00noonontheMondayprecedingourTuesdayclassmeeting
(unlessotherwisenoted).AssignmentsshouldbesentinasinglePDFdocumentlabeledLastname_Firstname_Topic.
Sendemailstoawilliams@ssvfunds.comandtcquinn@grglancaster.com.Latesubmissionswillnotreceivefeedback.
Classparticipationisamajorcomponentofyourgradeeveryonewillbeexpectedtocontributetoeachclass
discussion.
Classattendanceismandatory.
CLASSROOMNORMSANDEXPECTATIONS
ClassParticipation:
Preparation,Discussion,Organization
GuestSpeakers:
Thiscoursewillinvolveseveralbuysideguestlectures;classparticipationwillbecrucialtothesuccessofthecourse.

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