Value Investing

1.5 Credits · Level: Graduate

The course shall be framed through the eyes of Warren Buffett, who has demonstrated an appreciation of the power of competitive advantage and how such advantage translate to superior profitability and sustainable performance. Building on the work of the late Benjamin Graham and David Dodd the course aims to articulate the strategies and methodology of the value investment philosophy as it has evolved and how such philosophy is influenced by the study of strategic and behavioral economics. Students will be guided through the methods of Buffett by applying his methods under various scenarios. As the course has a practical orientation a case-based approach will be followed to gain understanding. The course shall proceed in several parts. To begin, the course shall undertake an exploration of why the Graham, Dodd, Buffett value oriented philosophy and its practitioners have disproportionally and consistently out-performed all other methodologies from a historical standpoint. Second, the course shall undertake to describe the search methods of Warren Buffett and consider both where and under what circumstances give rise to great opportunities. Concepts drawn from the field of behavioral economics will be introduced to build awareness of the systematic biases that motivate the behavior of market participants and how an informed observer can take advantage of them. Third we shall focus on the valuation method employed by Buffett and compare that to more traditional valuation methods such as the discounted cash flow model. Forth, after rendering a quantitative valuation of a firm we shall undertake a qualitative evaluation of the opportunity to determine if there exists in the words of Buffett “a durable competitive advantage” with an understanding that such advantages are fundamentally rooted in the strategic economics of the company in question. The course will also touch upon the question of growth and the types of growth that are likely to add value. Finally, the course shall address the question of risk management and awareness of personal biases in the evaluation of opportunities. The course is geared for those who wish to work in the area of buy-side investments be it investment management, private client wealth management and family offices, private equity, investment analysis and portfolio management or for the purposes of developing one’s own personal investing strategy. Those who take the course should interview very well for any such professional opportunities.