From Theory to Practice – A Guide to the Value Investing Process
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The purpose of this book is to show the reader a process that will enable him/her to find the stocks that are worth one dollar, but trade for fifty cents. It involves a three-step process. In the first step, the book develops an approach to identify possibly undervalued stocks. This step will start with a pure Ben Graham search approach and will be further refined. In the second step, the book develops a valuation methodology to determine the intrinsic value of the stocks obtained from the first step. It first discusses the theory and the differences, at a theoretical level, between value investing valuation and the traditional valuation one learns at a Finance program at any University and then transitions from theory to practice. The final step is that of deciding to buy or not, using the concept of Margin of Safety. Portfolio formation and risk management are also discussed in the final step.
The valuation of two U.S. companies, Fonar Corporation and Douglas Dynamics Inc. demonstrates the value investing process, shows how the theoretical concepts discussed throughout the book are applied in practice and differentiates this book from others.
Three files accompany the book – a valuation model and framework which facilitates simulations and the practical application of value investing, as well as the full valuation reports on Fonar Corporation and Douglas Dynamics Inc. To download these files, you will require a password. To obtain the password, you must fill out the purchaser’s details form and email it to firstname.lastname@example.org along with a proof of purchase.
Click here to download the valuation model and framework
Click here to download the full valuation report on Fonar Corporation
Click here to download the full valuation report on Douglas Dynamics Inc.