RSM2312HY Value Investing

Maureen Stapleton

Applicable Major:

Funds Management(c)

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TARGET AUDIENCE

Students interested in a rigorous course on company evaluation using the Value approach. RSM 2312 is a core course for the Funds Management major.

FORMAT

Full year, half-credit course meets in 13 bi-weekly sessions, held between September and April. Classes include a combination of lectures and guest speakers, all of whom are high profile value investors who generously share their insight and experience. Students work in groups to identify attractively priced stocks, manage a portfolio and present their recommendations to a panel of approximately twelve industry judges.

COURSE MISSION

The focus of this course is on the fundamental value-based approach to investing pioneered by Benjamin Graham and developed by Graham and David Dodd. The overall objective of the Graham/Dodd approach is to find undervalued companies based on their estimated intrinsic values. The critical element in the Graham approach is the search for the “margin of safety” (i.e. the purchase of $1.00 of intrinsic value for $.50).

COURSE SCOPE

The emphasis of this course is on both intellectual stimulation and practical rigorous applications, gained through the security analysis project. The course has a heavy participation component and emphasizes the development of both quantitative analytic skills and presentation skills. By completing this course students should be able to conduct a full equity analysis of a company, including a rigorous quantitative and qualitative assessment, culminating in a valuation and recommendation. Students will develop their ability to present their conclusions in a coherent and professional manner to a panel of industry judges. The value investing course received a $1,000,000 gift from a generous donor in 2006 which is now invested in a portfolio of stocks based on past students’ recommendations. The 2019/2020 Value class will provide recommendations for maintenance and changes to this Rotman VIP portfolio.

EVALUATION & GRADE DISTRIBUTION (tentative)

Grades are a measure of the performance of a student in individual courses. Each student shall be judged on the basis of how well he or she has command of the course materials.

ComponentWeight
Individual papers24%
Group Reports and Presentations36%
Final Exam40%

REQUIRED RESOURCES

TEXTS – Bruce C.N. Greenwald, Judd Kahn, Paul D. Sonkin and Michael van Biema, (GK) “Value Investing from Graham to Buffett and Beyond”, Wiley Finance, 2001.

Benjamin Graham, (BG) “The Intelligent Investor, “Revised Edition, Collins Business Essentials,1995.