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Security Analysis and Business Valuation on Wall Street + Companion Web Site: A Comprehensive Guide to Today's Valuation Methods Hardcover – May 3, 2010

ISBN-13: 978-0470277348 ISBN-10: 0470277343 Edition: 2nd

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Security Analysis and Business Valuation on Wall Street + Companion Web Site: A Comprehensive Guide to Today's Valuation Methods + Best Practices for Equity Research Analysts:  Essentials for Buy-Side and Sell-Side Analysts
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Read a Q&A with the Author
In an Amazon-exclusive interview, author Jeffrey Hooke discusses how the landscape for evaluating investments has changed [PDF].

Product Details

  • Hardcover: 480 pages
  • Publisher: Wiley; 2 edition (May 3, 2010)
  • Language: English
  • ISBN-10: 0470277343
  • ISBN-13: 978-0470277348
  • Product Dimensions: 7.3 x 1.4 x 10.3 inches
  • Shipping Weight: 2.1 pounds (View shipping rates and policies)
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (13 customer reviews)
  • Amazon Best Sellers Rank: #146,493 in Books (See Top 100 in Books)

Editorial Reviews

Review

Praise for the First Edition

"A cross between a textbook for analysts-in-training and a tell-all expose of the analyst profession."
Business Week

"Hooke has written a step-by-step explanation of how to analyze stock. He takes the reader from the basic yardsticks used to judge companies -- intrinsic value, relative value and acquisition value - and goes all the way to analyzing stocks in emerging overseas markets."
—ABC News.com

Advance Praise for the Second Edition

"A welcome successor to Graham and Dodd's Security Analysis."
Barron's Advance Praise for the Second Edition

"Jeff Hooke has written an excellent overview of the process of valuing individual equities and entire companies. It is useful for a variety of readers, ranging from active investors, to financial advisors, to principals of companies contemplating a sale or public offering. It has a tremendous amount of material between the covers of a single volume."
—William H. Heyman, Vice Chairman and Chief Investment Officer, The Travelers Companies, Inc.; and former director, Division of Market Regulation, U.S. Securities and Exchange Commission

"The Second Edition is released at a propitious time. As we recover from the worst financial crisis in recent memory, the need for thorough analysis is critical. Hooke's primer is readable and easily understood, even by those without CFA credentials. It should help practitioners avoid the mistakes of casual decision making."
—Dennis Flannery, retired executive vice president, Inter-American Development Bank

"This book is more than a textbook for anyone who wants to make a living as a valuation expert or securities analyst —it is a living, breathing, 'how to' guide on the latest methods, with plenty of real-life examples that hit home."
—Ron Everett, Managing Partner, Certified Business Appraiser, Business Valuation Center

"The financial crises of the past decade highlight the imperative for disciplined valuation. Hooke provides a broad array of concepts and tools to achieve this. He goes beyond a purely formulaic approach to focus on idiosyncratic characteristics in both public and private equity contexts."
—Alex Triantis, Chair, Finance Department, Robert H. Smith School of Business, University of Maryland

"This book represents an impressive effort to offer comprehensive coverage of business valuation. It combines the deep insight of an insider with the rigor of top academics. Jeff is not shy about giving his opinion, which makes the reading experience unique and exciting."
—Ludovic Phalippou, Professor of Finance, University of Amsterdam

"This is an invaluable reference for the M&A professional. Hooke provides a view of the forest, in giving the rationale for the methods in use and how they compare with each other. The text is punctuated by his own wry commentary and frequent examples."
—Gary Nelson, Chairman, Sigma Federal, former vice chairman of SRA International

"This book is a highly useful resource for any existing or soon-to-be professional in the financial analysis field. It is a must-read presentation of the valuation methodologies utilized in the private equity business."
—Matt Newton, Partner, Columbia Capital

"Hooke's book provides an insightful approach to both financial analysis and business valuation. It should be required reading for anyone involved in the securities industry, from money managers to investment bankers."
—George Konomos, Senior Advisor, Latigo Partners

“The new edition of Jeffrey Hooke’s (Hooke Associates and FOCUS, LLC) Security Analysis and Business Valuation on Wall Street contains fresh insights and updates on the fundamentals of security analysis and business valuation, new case study examples, and four new chapters.

Among other reasons, Hooke points out why experts should read this practitioner-oriented book: "Two market crashes -- and the attendant fallout -- suggest that business appraisers consider the use of higher discount rates, the need for recessions in many forecasts, and the inclusion of political risk in certain US business evaluations…The validity of each methodology -- be it guideline companies or discounted cash flow, to give two examples -- has to be cross checked against its counterparts now more than ever, or the appraiser can get false readings.”
Business Valuation Review, May 5, 2010

From the Inside Flap

Two major market crashes, numerous financial and accounting scandals, growth in private equity and hedge funds, Sarbanes-Oxley and related regulations, and international developments have changed security analysis and business valuation substantially over the past fourteen years. These events necessitated a second edition of this modern classic, praised earlier by Barron's as a "welcome successor to Graham and Dodd" and regarded by certified financial analysts (CFAs) as one of the most insightful valuation guides available.

The Second Edition of Security Analysis and Business Valuation on Wall Street examines how mutual funds, private equity funds, hedge funds, institutional money managers, investment banks, business appraisers, and corporate acquirers perform their craft of security analysis and business valuation in today's highly charged economic environment.

Completely updated to reflect the latest methodologies—and featuring a companion Website (www.wiley.com/go/hooke) containing valuation spreadsheets—this reliable resource represents the most comprehensive look at this discipline by someone who has actually worked as an investment banker, a private equity executive, and an international institutional investor.

Filled with in-depth insights and expert advice, this timely guide:

  • Shows the methodical process that practitioners use to value common stocks and operating companies and to make buy/sell decisions

  • Addresses how the Internet and computing power automate portions of the research and analytical effort

  • Includes new case study examples representative of valuation issues faced daily by professionals in this field

  • Discusses the impact of the two stock market crashes, the accounting and financial scandals, and new regulations on the evaluation process

  • Is a perfect tool for professors wishing to show their MBA students the essential tools of equity and business valuation

Security analysis and business valuation are core financial disciplines for those on Wall Street as well as corporate acquirers, business appraisers, and international investors. The Second Edition of Security Analysis and Business Valuation on Wall Street is an important book for anyone who needs a solid grounding in these critical financial topics.


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Customer Reviews

I would recommend it to anyone who is at the intermediate level.
Antoine
Overall I am very familiar with the first edition of this book, because I had to use it as a major source of guidelines at my previous job.
Dmitry Mikhaylov
An earlier review had listed this book as a modern day version of Security Analysis.
neophyte

Most Helpful Customer Reviews

14 of 14 people found the following review helpful By Dmitry Mikhaylov on May 23, 2010
Format: Hardcover
I just wanted to add several comments. Overall I am very familiar with the first edition of this book, because I had to use it as a major source of guidelines at my previous job. The book was a great source! I had some background in structured finance and investments analytics, but I had zero experience in equity valuation before. In some 40-60 hours I was able to learn a lot about firm valuation (especially useful material - dividend discount model, market comparables, and free cash flow models) so that I could start preparing my first equity valuation reports. The second edition is an extended version, which still has all the advantages of the first edition: straightforward approach to valuation, a lot of examples, as little cumbersome math as possible. It is definitely a must read for any private investor and novice financial analyst. By the way, some sections of this book (industry analysis) are still included in the CFA curriculum (level 2, Equity valuation).
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6 of 6 people found the following review helpful By Douglas R. Cannon on July 18, 2010
Format: Hardcover
As a long time practitioner of value investing, it is inspiring to see recent business school graduates and new investment analysts praise the first or second editions of the book and tell how valauble it was for them in understanding this complex area. This book is certainly a better resource that anything we had years ago at Harvard Business School.

Perhaps I am a good reviewing source from the investment community, as over the past five-year period 2005 to 2009, I ranked as the number #1 performing separate account value manager in the country, and this ranking includes all market cap categories (per the Morningstar rankings).
Both the first and second editions of the book sit on the top shelf in my office,and I probably have referred back to the first edition more than any other book that I have.

In my dealings with Mr. Hooke on investment matters over the years, he has proven himself to be one of the smartest people I know in the investment profession.
Douglas R. Cannon, CFA
President and Chief Investment Officer
Texas First Investment Management Company
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5 of 5 people found the following review helpful By C. Ang VINE VOICE on September 18, 2012
Format: Hardcover Verified Purchase
As a general valuation text, this book is, at best, of average quality. I would go with Damodaran's Investment Valuation or Koeller, et al.'s Valuation texts instead.

Part One of this book on the Investing Environment is too long and had too much extraneous information.

Part Two is pretty good. This is where I think most of the value in this book resides. The author gives you a good guide on how to perform an industry and company analysis, including things that have to be considered in order to determine the value of a company.

Part Three is a discussion of various valuation methods, and this is where other books do a better job. For example, Damodaran or Koeller have a much better discussion of valuation methods. The one thing lacking here is that being a post-crisis valuation book, there is no discussion of issues with valuation during the crisis period. For example, blindly applying the CAPM when the risk-free rate was declining faster than increases in the risk premiums during certain periods during the crisis led to wacky results.

Part Four is on "Special Cases," which was the most promising of all the topics but it turned out to be the biggest disappointment. I was (apparently) mistaken to think that this was going to be a more detailed discussion and implementation of the various special cases you can see from the TOC (PE, financial firms, insurance companies, etc.). However, this turns out to be just a high-level discussion of things most experienced valuation professionals know already (i.e., there are complications in valuing these other types of companies). The chapters in this section do not go into detail as to how to work around some of these complications.
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4 of 4 people found the following review helpful By Afishbein on May 17, 2010
Format: Hardcover
There are virtually no good textbooks for undergraduate and graduate students who need a broad introduction to the tools used by junior investment bankers (the ones that do the work), desk analysts, distressed securities investors and hedge fund traders. This book, newly updated, provides one. It is not a lot of theory. Rather it provides realistic descriptions of the techniques used everyday by professionals. And it is all in one place.
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2 of 2 people found the following review helpful By Antoine on October 15, 2011
Format: Hardcover
This is an intermediate level text that will teach you how to do the mechanics of "due dilligence" that most basic finance books recommend but never explain how to actually do. For me, the real gem of this book is that unlike most finance books, this one was written AFTER the financial crisis and so takes all that experience into account when writing about subjects.

I loved most how the author gives his perspective as a wall street insider on how many financial concepts are applied in the real world. The two that stuck out most for me were that nobody does DCF valuations in the real world, and that the qualifying factor to being on a company board is usually that you are one of the CEO's golfing buddies.

The book is well written and covers all the basis areas needed to perform an intermediate level securities valuation. I would recommend it to anyone who is at the intermediate level.
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