I just discovered that Professor Aswath Damodaran is teaching his equity valuation class this spring and webcasts of his classes are available free online. I discovered the new webcasts when I was searching for a valuation spreadsheet to analyze US Bancorp. Just like when I was back in college, I’m once again late for class.

Never the less, I plan on going through all the video class sessions over the next few months.  Would anyone be interested in join me? Maybe we could start a study group here for members of Fat Pitch Financials.  Let me know in the comments section if you are interested.

Professor Damodaran’s course covers the following topics: Read the rest of this entry »

Last year, I put together a stock analysis spreadsheet to help me to track a list of wide moat companies that I’m interested in investing in for the long term. I finally have finished updating that spreadsheet.

This new version of the Fat Pitch Finder Spreadsheet has been updated to address a problem with my net cash calculations that I discovered as a result of a comment I received on my analysis of the intrinsic value of Microsoft. I wasn’t including restricted cash when determining net cash on hand, so I was undervaluing some companies. In addition, I also added the following new features:

• Increased documentation using cell comments 
• New Free Cash Flow trend chart
• Added trailing twelve-month free cash flows to the trend analysis
• Cash and equivalents and debts are now broken out before net cash is calculated

To use this spreadsheet, you need to have Microsoft Excel, and I recommend that it is at least the Excel 2003 version. In addition, you need to install an “Add-In” to make the Fat Pitch Finder spreadsheet work.  The add-in you need is RCH_Stock_Market_Functions.xla at the smf_addin group files.  Be sure to install the add-in in the directory  C:\Program Files\SMF Add-In  in order for the spreadsheet to work. Finally, download the spreadsheet below and uncompress it before opening it.

If you find any problems with the Fat Pitch Finder spreadsheet or have any ideas on how to improve it, please share your thoughts below.

Download: Fat Pitch Finder 0.2

I have been slowly putting together a list of resources on international stock investing. Now that I’ve started getting the list of tools and resources together, I thought I would share them with you. The resources can all be found on the International Stock Research Tools page here at Fat Pitch Financials.

The coolest feature is an international equity map that graphically displays the relative performance of different national stock indexes. You can adjust the map to display either daily, weekly, monthly, 3 months, 6 months, 1 year, 2 years, or 5 years time periods. As a result of monitoring this map, I’ve started looking for value opportunities in Brazil and possibly Argentina.

I’m sure there many other great research tools and resources that can be added to this international stock investing page. Please suggest additions to this new page in the comments section below.

I have taken a keen interest in Web 2.0 and the powerful network effect that many of these new web sites are attempting to generating.  Since I’m a stock investing blogger, I have been watching how this new online development is effecting the investment landscape. Web 2.0 is finally starting to have an impact on stock investing sites, so I decided to research the competitors in this space.

Read the rest of this entry »

You can access the Wall Street Journal today for free via this link.

It appear this promotion is sponsored by Discovery (DISCA) (DISCB).  Maybe, this will be Dow Jones (DJ) future model for making revenue from the Wall Street Journal. Has it come down to this.

I just discovered some great valuation calculators at the Financial Times website.  In the Lex section of the site, there are four tools that you might find useful.  These calculators include the following:

• Discounted Cash Flow Model - This calculator lets you input 5 years of free cash flows based on EBIT, plus depreciation, less Capex, and taxes. You also need to input the weighted average cost of capital and the perpetual growth rate. Finally, to adjust the enterprise value by adding in net cash, minority interests, pensions and other liabilities, taxes, and associate investments. Anyone know what “Associate Investments” are?
• Dividend Discount - This is the classic Gordon’s growth model.  All you need to enter is the annual dividend amount, the dividend growth rate, and the cost of equity (i.e., the discount rate).
• Weighted Average Cost of Capital - This calculator takes the ratio of debt to equity to get a weighted average cost of capital.  I don’t really typically calculate my discount rates this way, but I know many of you likely do.
• Buy to Let - If real estate prices keep declining, I might start using this calculator to determine whether purchasing an investment property might generate enough rent to provide a value investment opportunity. Just replace the word “Let” with “Rent” and substitute £ with $.

I really like the way the Discounted Cash Flow Model calculator lays out the way you take the net present value (NPV) of the enterprise value from the DCF model and adjust it to get to the value of each share. The only thing that stumped me was the “Associate Investments” line. Anyone know what “Associate Investments” are? Is this a British term for something I might easily recognize?

While you are exploring the valuation tools, I also recommend that you explore the other content at FT.com. If you like what you see, I recommend getting a subscription to The Financial Times (affiliate link).

Steven from ValueBlogReview sent me the following question in an email today:

“Do you know of a quick formula to figure out a per annum interest rate when multiple deposits are made at different times?”

Read the rest of this entry »

I recently received an offer to share free trade publications with my readers.  Trade magazines and journals can be really useful for investors.  They provide a great way to learn about a particular industry.  These publications often point out emerging trends and industry scuttlebutt.

I personally just signed up to receive Global Finance and The Deal.  I figured I could use more exposure to international business news through Global Finance.  The Deal looks like it could be a good source of information on special situations and other arbitrage opportunities. The Financial Planning magazine also looks like it could be useful. You can find other financial publications in the Finance section of my free trade publications directory.

In terms of sector specific publications, Power looks like a good way to keep up with the energy sector.  I’ve been interested in several dental companies recently, so I was happy to find Dental Economics.  Finally, I was hoping to follow the biotechnology and pharmaceutical sector, but there are so many publication offerings for this sector that I haven’t been able to make up my mind on which ones I want to sign up for.  I’d love to hear your suggestions on which of these trade publications you feel are worth signing up for based on your experience.

* In addition to getting useful free trade publications from my magazine directory, you are also helping to support Fat Pitch Financials with each free magazine you sign up for.

This might be old news to readers of Value Investing News’ Blog, but I just created a custom search engine that focuses exclusively on returning results from the leading value investing websites. It uses the powerful Google (GOOG) search technology to create a customized search engine using Google’s new service, Google Co-op.

Value Investing Search is available on Value Investing News sidebar. You can also try it out below.

Value Investing Search

If you would like to help refine Value Investing Search, consider contributing to this project. You can join this project by visiting the Value Investing Search page and clicking on to the contributors link.

Determining your return on investment is a very important part of any investment review. Whether you’re investing in savings accounts, stocks, real estate, capital upgrades, or new business ventures, estimating a return on investment will aid you in choosing among investment options.

I don’t simply calculate a straight return on investment. I prefer determining an annualized rate of return that takes into consideration the timing of investments and return, as well as compounding. Most of you are probably familiar with this concept through the term Annual Percentage Yield (APY), compound annual growth rate (CAGR), or internal rate of return (IRR). Let me walk you through the steps on how you can calculate your return on investment in terms of APY:
Read the rest of this entry »