Professor Weigand’s Applied Equity Analysis and Portfolio Management truly does a service to investors with this excellent book. He gets straight to the point in each chapter without the filler most other books have. The reader can easily follow along by downloaded the free spreadsheets from Wiley’s website and can also watch over 7 hours of videos. There are videos and spreadsheets for each chapter!
In my opinion, there are I would say 3 parts. The first is a chapter on the bigger economic picture. He discusses all the important statistics, how he asses them and how you can keep track of these via free sources and the spreadsheet. I believe this is important in order to help determine how aggressive you will be with your investments. The second part contains chapters on historical analysis, analyzing the company and forecasting the income statement and balance sheet in order to determine the value of a stock. He does this step by step and you c
an again follow along and use the spreadsheets. The final chapter (part) is on portfolio risk and performance attribution.
Applied Equity Analysis and Portfolio Management does not go into the depth of McKinsey’s Valuation but at the same time it is not a basic/beginners book. That is one of its positives I believe. The spreadsheets are easy to follow and are key to the learning process. By getting your hands dirty you start to think about the company and the drivers instead of just filling in the blanks. As you do so, you can better understand value and can adjust the calculations to your liking. It engages the reader and gives him tools that he can build on.
The tools consist of 6 spreadsheets (chapters 2-7) and online videos. Having spent time looking at the spreadsheets I would not use them in their current form. For example, I would not estimate the balance sheet without even a basic cash flow projection. However they are still an excellent learning tool and the reader can make any changes they like. The videos are broken into sections so the viewer does not need to sit through long sessions. Further economic analysis from the professor can be found on his blog. The book can be found on Amazon.com.