Valuation is the key to smart investing this book shows you how The Little Book of Investing Like the Pros gives individual investors a crash course in the tools and techniques used on Wall Street.Valuation is the key to smart investing this book shows you how The Little Book of Investing Like the Pros gives individual investors a crash course in the tools and techniques used on Wall Street. Written by two expert practitioners at UBS, this book provides real, effective, practical guidance that allows investors to take a hands-on approach to the market. Readers will learn the four mission-critical valuation methods that professionals lean on, empowering them with the skills and understanding to take on the challenge of choosing the best stocks, armed with the same insights as Wall Street's smartest analysts. Valuation ratios say a lot about an investment's potential, and this book explains how individuals can put expert techniques to work for themselves. A total return approach to investing is about both the return of money, and the return on money. Proper valuation is the driver of all great investments, and the pros on Wall Street do it every day. The Little Book of Investing Like the Pros puts expert tools in the hands of individuals, helping them understand and effectively use the same techniques that give the pros a decided edge.
* Discover the importance of valuation before investment * Learn the essential methods and techniques used every day on Wall Street * Understand the critical metrics, and in which situations they apply * Become familiar with the tools and resources that can streamline due diligence Wall Street pros need to know what a company is worth before they can decide whether the stock price represents a good value. This book reveals their methods, and helps individuals apply the same techniques to their own investment strategy. For individual investors looking to take their portfolio into their own hands, The Little Book of Investing Like the Pros is a complete, hands-on resource.About the Authors ix
Foreword by Howard Marks xv
Acknowledgments xix
Disclaimer xxv
Introduction 1
Chapter One Step I: Idea Generation 19
Screens 22
Bottom-Up Approach 24
Top-Down Approach 59
Chapter Two Step II: Identifying the Best Ideas 71
Idea Review Framework 73
Investment Thesis 77
Business Overview 82
Management 91
Risks & Considerations 96
Financials & Valuation 99
Chapter Three Step III: Business & Financial Due Diligence 121
Business Due Diligence 123
Financial Due Diligence 148
Chapter Four Step IV: Valuation & Catalysts 171
Valuation 173
Market and Intrinsic Valuation 174
Buyout Valuation 194
Catalysts 206
Setting the Price Target 227
Chapter Five Step V: Investment Decision & Portfolio Management 233
Making the Investment Decision 236
Monitor the Investment 243
Portfolio Construction 250
Portfolio & Risk Management 263
Post-Mortem: Delphi Automotive 279
Bibliography & Recommended Reading 289 JOSHUA PEARL has served as a Managing Director at Brahman Capital, a long/short equity asset manager. He focuses on public equity investments and special situations utilizing a fundamentals-based approach. Previously, he structured high yield financings, leveraged buyouts, and restructurings as a Director at UBS Investment Bank. Prior to UBS, he worked at Moelis & Company and Deutsche Bank. He received his BS in Business from Indiana University's Kelley School of Business. He is also the co-author of Investment Banking: Valuation, LBOs, M&A, and IPOs .
JOSHUA ROSENBAUM is a Managing Director and Head of the Industrials & Diversified Services Group at RBC Capital Markets. He originates, structures, and advises on M&A, corporate finance, and capital markets transactions. Previously, he worked at UBS Investment Bank and the International Finance Corporation, the direct investment division of the World Bank. He received his AB from Harvard and his MBA with Baker Scholar honors from Harvard Business School. He is also the co-author of Investment Banking: Valuation, LBOs, M&A, and IPOs .
