|Module / ECTS / Path / Specialisation||Module :Value Investing : 4 ECTS.|
|Open for visitors||yes (4 ECTS)|
|Working language :||English|
|Volume of contact hours :||20 h|
|Workload to be expected by the student :||60 h|
Track : Attendance
|LEARNING GOAL 1 : Students will master state-of-the-art knowledge and tools in management fields in general, as well as in areas specific to the specialized field of management.|
|Students will identify a business organization’s operational and managerial challenges in a complex and evolving environment.|
|Students will understand state-of-the-art management concepts and tools and use them appropriately.|
|LEARNING GOAL 2 : Students will develop advanced-level managerial skills.|
|Students will work collaboratively in a team.|
|Students will participate in a decision-making process in a critical way.|
|Students will communicate ideas effectively, both orally and in writing, in a business context.|
|LEARNING GOAL 4: Students will study and work effectively in a multicultural and international environment.|
|Students will analyze business organizations and problems in a multicultural and international environment|
This course develops a framework for value investing based on a modern treatment of the Graham and Dodd approach to investment management. The course covers the search for undervalued stocks, the valuation of stocks that pass the screening process, and the investment decision to buy a stock if it is below the intrinsic value by a margin of safety
- Present the Graham & Dodd approach to investment management
- Present central empirical research related to value investing.
- Explain the role of firm quality in value investing
- Create stock screens.
- Generate and perform a Graham & Dodd style firm valuation.
- Evaluate and make investment decisions.
Introduction to the course (January 22, 10:00-11:45): Overview of course and requirements
Session 1 (January 23, 10:00-11:45): Introduction to the value approach to investment management
- Factors that cause prices to deviate from fundamental value
- Overview of the value investing process
- Overview of valuation by active investors
- Valuing the assets
Session 2 (January 29, 10:00-11:45): Earnings Power Value
- Earnings power value: assets plus franchise
Session 3 (January 31, 10:00-11:45): Value of Growth & Portfolio Construction
- The value of growth within the franchise
- Shareholders and management
- Margin of safety
- Constructing the portfolio (diversification etc.)
- Value investing cases
Session 4 (February 2, 10:00-11:45): Quantitative Value Investing
- Stock screening (e.g., P/E and/or P/B)
- Combinations: cheapness and quality (etc.)
- Other quantitative value related investing methods (cheapness, quality, liquidity, technical factors, risk, and corporate governance)
Group presentations of investment cases (February 12-15; approximately 8x90 minutes)
- 15 minute presentations of investment case by group
- 5 minutes for discussants
Greenwald, B., J. Kahn, P.D. Sonkin, M. van Biema. Value Investing: from Graham to Buffett and Beyond. 2001. Chapters 1-4.
Graham, B. The Intelligent Investor. Revised edition, 2003. Chapters 1, 8, and 15.
Penman, S. 2006. Handling valuation models. Journal of Applied Corporate Finance 18, 48-55.
Greenwald, B., J. Kahn, P.D. Sonkin, M. van Biema. Value Investing: from Graham to Buffett and Beyond. 2001. Chapters 5-6.
Graham, B. The Intelligent Investor. Revised edition, 2003. Chapter 12.
Greenwald, B., J. Kahn. All strategy is local. Harvard Business Review, September 2005 (10 pages).
Session 3: Greenwald, B., J. Kahn, P.D. Sonkin, M. van Biema.Value Investing: from Graham to Buffett and Beyond. 2001. Chapter 7-8.
Graham, B. The Intelligent Investor. Revised edition, 2003. Chapters 19 and 20.
Piotroski, J.D. Value investing: The use of historical financial statement information to separate winners from losers. Journal of Accounting Research 38, 2000, 1-41 (Supplement).
Novy-Marx, R., 2014. Quality investing.Working paper, University of Rochester, May 2014.
Haugen, R; N. Baker. Commonality in the determinants of expected stock returns. Journal of Financial Economics, 41, 1996, pages 401-439.
Novy-Marx, R., 2013. The other side of value: The gross profitability premium. Journal of Financial Economics 108, 1-28
Such behaviors as...
... may lead to expulsion from classes.