Details

Security Analysis and Business Valuation on Wall Street


Security Analysis and Business Valuation on Wall Street

A Comprehensive Guide to Today's Valuation Methods
Wiley Finance, Band 458 2. Aufl.

von: Jeffrey C. Hooke

63,99 €

Verlag: Wiley
Format: EPUB
Veröffentl.: 07.04.2010
ISBN/EAN: 9780470608920
Sprache: englisch
Anzahl Seiten: 432

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Beschreibungen

<p><b>An insider's look at security analysis and business valuation, as practiced by Wall Street, Corporate America, and international businesses</b></p> <p>Two major market crashes, numerous financial and accounting scandals, growth in private equity and hedge funds, Sarbanes Oxley and related regulations, and international developments changed security analysis and business valuation substantially over the last fourteen years. These events necessitated a second edition of this modern classic, praised earlier by <i>Barron's</i> as a "welcome successor to Graham and Dodd" and used in the global CFA exam.</p> <p>This authoritative book shows the rational, rigorous analysis is still the most successful way to evaluate securities. It picks up where Graham and Dodd's bestselling <i>Security Analysis</i> - for decades considered the definitive word on the subject - leaves off. Providing a practical viewpoint, <i>Security Analysis on Wall Street</i> shows how the values of common stock are really determined in today's marketplace. Incorporating dozens of real-world examples, and spotlighting many special analysis cases - including cash flow stocks, unusual industries and distressed securities - this comprehensive resources delivers all the answers to your questions about security analysis and corporate valuation on Wall Street.</p> <p>The <i>Second Edition</i> of <i>Security Analysis on Wall Street</i> examines how mutual funds, private equity funds, hedge funds, institutional money managers, investment banks, business appraisers, and corporate acquirers perform their craft of security analysis and business valuation in today's highly charged environment. Completely updated to reflect the latest methodologies, this reliable resource represents the most comprehensive book written by someone who has actually worked as an investment banker, private equity executive, and international institutional investor.</p> <ul> <li>Shows the methodical process that practitioners use to value common stocks and operating companies and to make buy/sell decisions</li> <li>Discusses the impact of the two stock market crashes, the accounting and financial scandals, and the new regulations on the evaluation process</li> <li>Covers how Internet and computing power automate portions of the research and analytical effort</li> <li>Includes new case study examples representative of valuation issues faced daily by mutual funds, private equity funds, hedge funds, institutional investors, investment banks, business appraisers, and corporate acquirers</li> <li>Is a perfect tool for professors wishing to show their MBA students the essential tools of equity and business valuation</li> </ul> <p>Security analysis and business valuation are core financial disciplines for Wall Streeters, corporate acquirers, and international investors. The <i>Second Edition</i> of <i>Security Analysis on Wall Street</i> is an important book for anyone who needs a solid grounding in these critical finance topics.</p>
<p>Preface xiii</p> <p>What Is Security Analysis? xiv</p> <p>Recent Trends xv</p> <p>Why Study Security Analysis and Business Valuation? xvii</p> <p>Overview of the Contents xviii</p> <p>What’s New in the Second Edition xviii</p> <p><b>PART ONE The Investing Environment 1</b></p> <p><b>CHAPTER 1 Why Analyze a Security? 3</b></p> <p>The Origins of Security Analysis 3</p> <p>No Profit Guarantee 5</p> <p>Day-to-Day Trading and Security Analysis 6</p> <p>Herd Psychology and Security Analysis 6</p> <p>Momentum Investors 7</p> <p>Game Theory and Security Analysis 8</p> <p>The Premise of Security Analysis 9</p> <p>Scientific Method 10</p> <p>Security Analysis Techniques 12</p> <p>Basic Valuation Approaches 12</p> <p>Other Valuation Approaches 14</p> <p>Summary 16</p> <p><b>CHAPTER 2 Who’s Practicing Security Analysis and Business Valuation? 17</b></p> <p>Securities Firms and Their Analysts 18</p> <p>Major Institutional Investors 20</p> <p>A Dying Art? 21</p> <p>Index Funds and Exchange-Traded Funds 24</p> <p>Small Money Management Firms 25</p> <p>Rating Agencies 26</p> <p>Individual Investors: A Special Category 26</p> <p>Business Valuation 28</p> <p>Summary 28</p> <p><b>CHAPTER 3 Seeking a Level Playing Field 29</b></p> <p>Brief History of Securities Regulation 30</p> <p>The Chief Regulator: The Securities and Exchange Commission 32</p> <p>Sales and Trading Practices 34</p> <p>Margin Regulation 37</p> <p>The Life Cycle of a New Security Issue 37</p> <p>Summary 49</p> <p><b>CHAPTER 4 Other Sources of Information 51</b></p> <p>The Business Media 51</p> <p>The Free Internet 53</p> <p>The Fee-for-Service Internet 53</p> <p>Trade Associations, Consulting Firms, Government Publications, and Financial Organizations 54</p> <p>Credit Rating Agencies 54</p> <p>Securities Firm Research 55</p> <p>Newswires 56</p> <p>Independent Expert Services 56</p> <p>Summary 57</p> <p><b>PART TWO Performing the Analysis and Writing the Research Report 59</b></p> <p><b>CHAPTER 5 Starting the Analysis 61</b></p> <p>The Security Analysis Process 62</p> <p>Model Research Report 63</p> <p>The Analyst’s Responsibility 64</p> <p>The Cascade of Projections 66</p> <p>Selecting Stocks for Study: Top-Down versus Bottom-Up 67</p> <p>Limited Time and Resources 68</p> <p>The Margin of Safety 69</p> <p>Summary 70</p> <p><b>CHAPTER 6 Industry Analysis 73</b></p> <p>Background 73</p> <p>Organizing an Industry Analysis 75</p> <p>Industry Classification 75</p> <p>External Factors 81</p> <p>Demand Analysis 86</p> <p>Supply Analysis in the Industry Study 92</p> <p>Profitability, Pricing, and the Industry Study 94</p> <p>International Competition and Markets 95</p> <p>Summary 98</p> <p><b>CHAPTER 7 Company-Specific Analysis 99</b></p> <p>Systematic Approach of a Business Analysis 101</p> <p>Overview and Business Description 106</p> <p>Products and Markets Section 106</p> <p>Production and Distribution 110</p> <p>Competition 111</p> <p>Other Topics Included in the Business Review114</p> <p>Summary 117</p> <p><b>CHAPTER 8 Financial Statement Analysis of an Established Business 119</b></p> <p>Beginning the Investigation 120</p> <p>The Raw Materials of an Analysis 121</p> <p>Evolution of the Approach to Financial Statements 122</p> <p>Illustration of the Basic Approach 123</p> <p>Review of Neiman Marcus Financial Analysis 135</p> <p>Summary 137</p> <p><b>CHAPTER 9 The Limitations of Accounting Data 139</b></p> <p>Basic Accounting Issues 141</p> <p>Global Issues 141</p> <p>Company-Specific Accounting Issues 145</p> <p>The Fundamental Objective of Public Companies 149</p> <p>Case Study: Stability Corporation 150</p> <p>Summary 163</p> <p><b>CHAPTER 10 Financial Analysis and Company Classification 165</b></p> <p>Company Classifications 166</p> <p>The Mature Company 166</p> <p>The Growth Company 167</p> <p>The Cyclical Company 169</p> <p>The Declining Company 175</p> <p>The Turnaround 175</p> <p>The Pioneer 175</p> <p>Financial Games 176</p> <p>Extra Shares Outstanding? 180</p> <p>Summary 180</p> <p><b>CHAPTER 11 Financial Projection Pointers 181</b></p> <p>The Cascade of Projections 182</p> <p>The Typical Financial Projection 182</p> <p>Alternate Means of Forecasting 183</p> <p>Critiquing the Huntsman Chemical Projection 185</p> <p>Preparing Projections 186</p> <p>Cyclical Company Forecast 189</p> <p>Hockey Stick Phenomenon 190</p> <p>Summary 192</p> <p><b>PART THREE Valuation and the Investment Decision 193</b></p> <p><b>CHAPTER 12 Valuation Methodologies 195</b></p> <p>Assessing Each Methodology 196</p> <p>Applying Multiple Methodologies 197</p> <p>Summary 198</p> <p><b>CHAPTER 13 Intrinsic Value and Discounted Cash Flow 199</b></p> <p>Issues in Applying Discounted Cash Flow 200</p> <p>Discounted Cash Flow versus Relative Value 203</p> <p>Discounted Cash Flow and the P/E Ratio 203</p> <p>The Discounted Cash Flow Valuation Process 205</p> <p>Summary 208</p> <p><b>CHAPTER 14 Discounted Cash Flow: Choosing the Right Discount Rate 209</b></p> <p>Beta 211</p> <p>The Buildup Method for the Equity Rate of Return 212</p> <p>Special Cases 213</p> <p>Summary 215</p> <p><b>CHAPTER 15 The Relative Value Approach 217</b></p> <p>Real Estate Analogy 218</p> <p>What’s the Right P/E Ratio? 218</p> <p>Case Study: Temporary Staffing Services 219</p> <p>Valuing an Initial Public Offering 222</p> <p>Balance Sheet Items and Relative Value 223</p> <p>How High Is Up? 223</p> <p>Summary 223</p> <p><b>CHAPTER 16 Marginal Performers 225</b></p> <p>Defining the Problem Company 226</p> <p>Small Companies and Relative Value 232</p> <p>Summary 232</p> <p><b>CHAPTER 17 The Mergers and Acquisitions Market, Security Analysis, and Valuation 233</b></p> <p>Understanding Leveraged Buyouts 235</p> <p>LBO Mechanics 236</p> <p>Case Study: Keane, Inc. 237</p> <p>How Much Can the PE Firm Pay? 237</p> <p>LBO Valuation and the Security Analysis of a Publicly Traded Company 239</p> <p>Strategic Takeover Values 240</p> <p>Summary 241</p> <p><b>CHAPTER 18 Sum-of-the-Parts Analysis 243</b></p> <p>Background 243</p> <p>Taxes Favor Spin-Offs versus Cash Sales 244</p> <p>Sample Sum-of-the-Parts Analysis 245</p> <p>Business Division Valuation 245</p> <p>Nonoperating Corporate Assets and Liabilities 250</p> <p>Unlocking Sum-of-the-Parts Values 250</p> <p>Summary 251</p> <p><b>CHAPTER 19 The Investment Recommendation 253</b></p> <p>Summary Top-Down Analysis 255</p> <p>Discounted Cash Flow Valuation 257</p> <p>Relative Value/Sum-of-the-Parts Valuation Approach 259</p> <p>Acquisition Value 261</p> <p>Leveraged Buyout Method 262</p> <p>Investment Recommendation 265</p> <p>Summary 266</p> <p><b>PART FOUR Special Cases 267</b></p> <p><b>CHAPTER 20 Private Equity 269</b></p> <p>Industry Segmentation and Size 269</p> <p>Fee Structure 270</p> <p>Private Equity Does Not Beat the S&P 500 271</p> <p>Private Equity Funds and Information Collection 271</p> <p>Private Equity Changes to the Public Company</p> <p>Valuation Methodology 272</p> <p>Liquidity and Control Adjustments 273</p> <p>Summary 277</p> <p><b>CHAPTER 21 Natural Resource Companies 279</b></p> <p>General Methodology 279</p> <p>The Financial Reporting of Natural Resource Companies 281</p> <p>Case Study: Encore Acquisition Company 284</p> <p>Mining Companies 290</p> <p>Summary 292</p> <p><b>CHAPTER 22 Financial Industry Stocks 293</b></p> <p>Product Lines 295</p> <p>The Nature of Financial Assets 296</p> <p>Two Sets of Skills 298</p> <p>Lending 298</p> <p>Large Commercial Banks 304</p> <p>Summary 307</p> <p><b>CHAPTER 23 Insurance Companies 309</b></p> <p>General Background 309</p> <p>Principal Functions of an Insurance Company 311</p> <p>Insurance Company Regulation 312</p> <p>Financial Statement Analysis: Property and Casualty Company 313</p> <p>Financial Statement Ratios 317</p> <p>Life Insurance Companies 317</p> <p>Summary 319</p> <p><b>CHAPTER 24 Highly Speculative Stocks 321</b></p> <p>Background 321</p> <p>Discounted Cash Flow 323</p> <p>Case Study: Ballard Power Systems 324</p> <p>Venture Capital Markups and IPOs 328</p> <p>Historical Perspective 329</p> <p>Security Analysis, Technology Stocks, and Portfolio 329</p> <p>Summary 330</p> <p><b>CHAPTER 25 Distressed Securities and Turnarounds 331</b></p> <p>Investment Opportunities 332</p> <p>Screening Technique 333</p> <p>Recognize the Options of an Unsuccessful Turnaround 334</p> <p>Financial Analysis of a Company with Leverage Problems 335</p> <p>The Investment Decision 338</p> <p>Evaluating Turnarounds 339</p> <p>Liquidations 340</p> <p>Summary 342</p> <p><b>CHAPTER 26 International Stocks 343</b></p> <p>The Role of Security Analysis 343</p> <p>American Depositary Receipts 345</p> <p>Developed Country Markets 346</p> <p>Relative Value Multiples 349</p> <p>Summary 350</p> <p><b>CHAPTER 27 The Emerging Markets 351</b></p> <p>Emerging Markets and Security Analysis 353</p> <p>Stock Pricing Guidelines 357</p> <p>Financial Projections 360</p> <p>Emerging Market Equity Discount Rate 361</p> <p>Relative Value in the Emerging Markets 364</p> <p>Summary 366</p> <p><b>PART FIVE In Conclusion 367</b></p> <p><b>CHAPTER 28 Asset Booms and Busts 369</b></p> <p>The 2008 Crash: Contributing Causes 369</p> <p>Collapse of the U.S. Housing Bubble 370</p> <p>Failure of the Referees 371</p> <p>The Certainty of Another Crash 375</p> <p>How Might Security Analysis and Business Valuation Change? 377</p> <p>Summary 378</p> <p><b>CHAPTER 29 Closing Thoughts 379</b></p> <p>Notes 383</p> <p>About the Author 385</p> <p>Index 387</p>
<b>Praise for the First Edition</b> <p>"A cross between a textbook for analysts-in-training and a tell-all expose of the analyst profession."<br /> —<i>Business Week</i></p> <p>"Hooke has written a step-by-step explanation of how to analyze stock. He takes the reader from the basic yardsticks used to judge companies -- intrinsic value, relative value and acquisition value - and goes all the way to analyzing stocks in emerging overseas markets."<br /> —ABC News.com</p> <p><b>Advance Praise for the Second Edition</b></p> <p>"A welcome successor to Graham and Dodd's Security Analysis."<br /> —<i>Barron's</i> Advance Praise for the <i>Second Edition</i></p> <p>"Jeff Hooke has written an excellent overview of the process of valuing individual equities and entire companies. It is useful for a variety of readers, ranging from active investors, to financial advisors, to principals of companies contemplating a sale or public offering. It has a tremendous amount of material between the covers of a single volume."<br /> —William H. Heyman, Vice Chairman and Chief Investment Officer, The Travelers Companies, Inc.; and former director, Division of Market Regulation, U.S. Securities and Exchange Commission</p> <p>"The Second Edition is released at a propitious time. As we recover from the worst financial crisis in recent memory, the need for thorough analysis is critical. Hooke's primer is readable and easily understood, even by those without CFA credentials. It should help practitioners avoid the mistakes of casual decision making."<br /> —Dennis Flannery, retired executive vice president, Inter-American Development Bank</p> <p>"This book is more than a textbook for anyone who wants to make a living as a valuation expert or securities analyst —it is a living, breathing, 'how to' guide on the latest methods, with plenty of real-life examples that hit home."<br /> —Ron Everett, Managing Partner, Certified Business Appraiser, Business Valuation Center</p> <p>"The financial crises of the past decade highlight the imperative for disciplined valuation. Hooke provides a broad array of concepts and tools to achieve this. He goes beyond a purely formulaic approach to focus on idiosyncratic characteristics in both public and private equity contexts."<br /> —Alex Triantis, Chair, Finance Department, Robert H. Smith School of Business, University of Maryland</p> <p>"This book represents an impressive effort to offer comprehensive coverage of business valuation. It combines the deep insight of an insider with the rigor of top academics. Jeff is not shy about giving his opinion, which makes the reading experience unique and exciting."<br /> —Ludovic Phalippou, Professor of Finance, University of Amsterdam</p> <p>"This is an invaluable reference for the M&A professional. Hooke provides a view of the forest, in giving the rationale for the methods in use and how they compare with each other. The text is punctuated by his own wry commentary and frequent examples."<br /> —Gary Nelson, Chairman, Sigma Federal, former vice chairman of SRA International</p> <p>"This book is a highly useful resource for any existing or soon-to-be professional in the financial analysis field. It is a must-read presentation of the valuation methodologies utilized in the private equity business."<br /> —Matt Newton, Partner, Columbia Capital</p> <p>"Hooke's book provides an insightful approach to both financial analysis and business valuation. It should be required reading for anyone involved in the securities industry, from money managers to investment bankers."<br /> —George Konomos, Senior Advisor, Latigo Partners</p> <p>“The new edition of <b>Jeffrey Hooke’s</b> (Hooke Associates and FOCUS, LLC) <i><a href="http://www.amazon.com/Security-Analysis-Business-Valuation-Companion/dp/0470277343/ref=sr_1_1?ie=UTF8&s=books&qid=1272910382&sr=8-1">Security Analysis and Business Valuation on Wall Street</a></i> contains fresh insights and updates on the fundamentals of security analysis and business valuation, new case study examples, and four new chapters.</p> <p>Among other reasons, Hooke points out why experts should read this practitioner-oriented book: "Two market crashes -- and the attendant fallout -- suggest that business appraisers consider the use of higher discount rates, the need for recessions in many forecasts, and the inclusion of political risk in certain US business evaluations…The validity of each methodology -- be it guideline companies or discounted cash flow, to give two examples -- has to be cross checked against its counterparts now more than ever, or the appraiser can get false readings.”<br /> — <i>Business Valuation Review, May 5, 2010</i></p>
<p><b>PHILIP PLAIT, Ph.D.,</b> works in the physics and astronomy department at Sonoma State University in California. He maintains the Web site badastronomy.com and writes monthly articles on astronomy for the German newspaper <i>Die Frankfurter Allgemeine Zeitung.</i> His work has appeared in the <i>Encyclopedia Britannica Yearbook of Science and the Future</i> and <i>Astronomy</i> magazine. He also writes a monthly column for astronomy.com.
<p><b>Advance praise for Philip Plait's</b></p> <p>"<i>Bad Astronomy</i> is just plain good! Philip Plait clears up every misconception on astronomy and space you never knew you suffered from."<br />—<b>Stephen Maran</b>, Author of <i>Astronomy for Dummies</i> and editor of <i>The Astronomy and Astrophysics Encyclopedia</i></p> <p>"Thank the cosmos for the bundle of star stuff named Philip Plait, who is the world's leading consumer advocate for quality science in space and on Earth. This important contribution to science will rest firmly on my reference library shelf, ready for easy access the next time an astrologer calls."<br />—<b>Dr. Michael Shermer</b>, Publisher of <i>Skeptic</i> magazine, monthly columnist for <i>Scientific American</i>, and author of <i>The Borderlands of Science</i></p> <p>"Philip Plait has given us a readable, erudite, informative, useful, and entertaining book. <i>Bad Astronomy</i> is Good Science. Very good science . . ."<br />—<b>James "The Amazing" Randi</b>, President, James Randi Educational Foundation, and author of <i>An Encyclopedia of Claims, Frauds, and Hoaxes of the Occult and Supernatural</i></p> <p>"<i>Bad Astronomy</i> is a fun read. Plait is wonderfully witty and educational as he debunks the myths, legends, and 'conspiracies' that abound in our society.</p> <p>'The Truth Is Out There'—and it's in this book. I loved it!"<br />—<b>Mike Mullane</b>, Space Shuttle astronaut and author of <i>Do Your Ears Pop in Space?</i></p>

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