Quantitative Value Investing: Frameworks for stock valuation

Quantitative Value Investing: Frameworks for stock valuation

Hello everyone. Welcome to this course on quantitative value investing. In this course, I am trying to provide you with a few valuation frameworks that are quite useful in evaluating the attractiveness of a stock at a given price. I have tried to summarise the frameworks that I have found useful in my investment journey over the last two decades in the Indian equity market. My initial decade was spent as a research analyst in a domestic mutual fund and a member of the investment team in a couple of foreign institutional investment firms. In the next decade, I changed my career path but continued to be an active investor.

So why am I offering this course in the first place? There is an old proverb, If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime. I recently analysed the 5-year performance of about 40 large-cap mutual funds and found that only 2 of them could beat the benchmark NIFTY index. I designed this course keeping the enterprising investor in mind who can probably do a much better job if he operates within disciplined investment frameworks.

So, who will find this course useful? I have designed this course at an intermediary level for enterprising investors. He needs to have a basic understanding of finance and valuation-related terminologies. So, if you are looking for a basic beginner’s course in investing in the stock market then you are at the wrong place.

In this course, I will use valuation frameworks to try to answer some tricky investment questions. For example, if one business operates at 18% ROE and one operates at 15% ROE how much more you are willing to pay the former in terms of P/B or P/E multiple. The further complication brought in by growth is also considered. For example, if presented a 20% ROE business with 4% growth versus a 16% ROE business growing at 10% how can you compare the price you can pay for the two businesses? Also, addressed will be the tricky question of high growth companies, where growth is much more than the required rate of return.  Such stocks usually sell at high valuations – how to appraise the value for such cases. All these issues will be addressed in this course.

The course will also introduce you to many other value investing frameworks as well.

The very important but often neglected aspect of position sizing will also be covered in depth.

Coming to the course structure, while there will be a few theory sessions, mostly I will be relying on live case studies to illustrate the concepts. These will be mainly companies listed in Indian stock markets. But let me declare upfront that you are not going to get a magic formula that provides you with multi-bagger stocks. It is a course that will help you to develop your thinking on valuations.

So welcome and let me wish you all a happy and enlightening journey.

Learn quantitative techniques to estimate intrinsic value, margin of safety, price implied expectation & position sizing

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What you will learn

• Using quantitative techniques to estimate a company's intrinsic value
• Identifying stocks for investing using value investing techniques
• Understanding position sizing - how much to buy / sell and managing the portfolio

Rating: 5

Level: Intermediate Level

Duration: 5 hours

Instructor: Sharad S Ramnarayanan