Summary of Session 1: Introduction to Valuation

00:00:00 - 00:15:00

In this video, Professor David Tepper discusses the concept of valuation and how it can be used to make decisions in business. He also discusses the three main reasons why people do valuation: to cover their rear ends, to make money, and to fight the lemming instinct. Tepper then provides a brief description of the different types of lemmings and how they view valuation. Finally, he provides an example of how valuation can be used to make an investment decision.

• 00:00:00 In this video, Professor David Tepper discusses the concept of valuation and how it can be used to make decisions in business. He also discusses the three main reasons why people do valuation: to cover their rear ends, to make money, and to fight the lemming instinct. Tepper then provides a brief description of the different types of lemmings and how they view valuation. Finally, he provides an example of how valuation can be used to make an investment decision.
• 00:05:00 In valuation, most people start with their preconceptions of what they think the value of the company should be, and it is difficult not to do. The first big problem with valuation is that people overestimate the impact of their knowledge about the company. The second big problem is that people become biased based on their mission. The third big problem is that people become fatigued with entering numbers into a model and it becomes garbage in. Relative valuation is the process of valuing a company based on how it compares to other similar companies.
• 00:10:00 The three main approaches to valuation are intrinsic value, relative value, and option pricing. The first two approaches are based on estimates of an asset's future cash flows, while the third is based on assuming that markets make mistakes. All three approaches require assumptions about how markets work.
• 00:15:00 This video discusses different approaches to valuation, and how option pricing can be used to help determine a company's worth.