Security Analysis and Business Valuation on Wall Street + Companion Web Site: A Comprehensive Guide to Today's Valuation Methods (Wiley Finance) [Hardcover]

Jeffrey C. Hooke (Author)

Book Description

Publication Date: May 3, 2010 | ISBN-10: 0470277343 | ISBN-13: 978-0470277348 | Edition: 2

An insider's look at security analysis and business valuation, as practiced by Wall Street, Corporate America, and international businesses

Two major market crashes, numerous financial and accounting scandals, growth in private equity and hedge funds, Sarbanes Oxley and related regulations, and international developments changed security analysis and business valuation substantially over the last 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 used in the global CFA exam.

This authoritative book shows the rational, rigorous analysis is still the most successful way to evaluate securities. It picks up where Graham and Dodd's bestselling Security Analysis - for decades considered the definitive word on the subject - leaves off. Providing a practical viewpoint, Security Analysis on Wall Street shows how the values of common stock are really determined in today's marketplace. Incorporating dozens of real-world examples, and spotlighting many special analysis cases - including cash flow stocks, unusual industries and distressed securities - this comprehensive resources delivers all the answers to your questions about security analysis and corporate valuation on Wall Street.

The Second Edition of Security Analysis 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 environment. Completely updated to reflect the latest methodologies, this reliable resource represents the most comprehensive book written by someone who has actually worked as an investment banker, private equity executive, and international institutional investor.

• Shows the methodical process that practitioners use to value common stocks and operating companies and to make buy/sell decisions
• Discusses the impact of the two stock market crashes, the accounting and financial scandals, and the new regulations on the evaluation process
• Covers how Internet and computing power automate portions of the research and analytical effort
  
• Includes new case study examples representative of valuation issues faced daily by mutual funds, private equity funds, hedge funds, institutional investors, investment banks, business appraisers, and corporate acquirers
• 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 Wall Streeters, corporate acquirers, and international investors. The Second Edition of Security Analysis on Wall Street is an important book for anyone who needs a solid grounding in these critical finance topics.

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 Publisher

A dynamic real-world antidote to the abstract approach to securities analysis found in other books on the subject. For more than 65 years, Graham and Dodd's Security Analysis has been the number-one guide on the subject. Offering an up-to-the-minute, real-world view of security analysis as it is currently practiced on Wall Street, this book picks up where Graham and Dodd leave off. A welcome departure from the rarefied approach taken at most business schools, Security Analysis teaches by example with dozens of recent securities issues. --This text refers to an out of print or unavailable edition of this title.

See all Editorial Reviews

Product Details

• Hardcover: 408 pages
• Publisher: Wiley; 2 edition (May 3, 2010)
• Language: English
• ISBN-10: 0470277343
• ISBN-13: 978-0470277348
• Product Dimensions: 7.4 x 1.3 x 10.3 inches
• Shipping Weight: 2.1 pounds (View shipping rates and policies)
• Average Customer Review: 4.4 out of 5 stars  See all reviews (30 customer reviews)
• Amazon Best Sellers Rank: #76,690 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

13 of 13 people found the following review helpful

5.0 out of 5 stars 2nd edition May 23, 2010

By Dmitry Mikhaylov

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).

12 of 13 people found the following review helpful

5.0 out of 5 stars Terrific summary of how to value a stock! October 11, 1998

By A Customer

Format:Hardcover

The book is a terrific summary of how to value a stock. It gives a step by step outline of the process for a variety of stock categories. For example,you can value a manufacturing company with one technique, while savings and loans stocks and hi tech stocks , for example, require other methods. The book explains how all these different industries are handled.

The first five chapters really gave me the insiders view of how Wall Street operates, and how it prices IPO's, for example. The author, Jeffrey Hooke, worked on Wall Street a lot, and he doesn't pull any punches. Many things that go on are only semi-honest and he isn't afraid to reveal the dark underbelly of the securities business. I really liked the way he showed how many firms exaggerate their sales and earnings per share. You nevre see this sort of thing in other books.

Just by following his advice on pricing stocks on a relative value basis saved me about $3,000 on a recent trade. I recommend this book.

6 of 6 people found the following review helpful

4.0 out of 5 stars Very resourceful from a broad persperctive April 16, 2004

By A Customer

Format:Hardcover

I would recommend this book to someone who wants a broad exposure of "Security Analysis on Wall Street." Mr. Hooke gives a great overview of the many facets of securities analysis. The drawback of this book is that it lacks specifics. For example, I was interested in getting a deeper analysis of valuation methodologies, however, what I found was a general overview of this section--the author then jumped right on to the next section. This example relates to all of the topic areas. Going deeper into topic areas so that more educated and experienced readers could get insight was not available for the most part. Nevertheless, I rate this book 4 stars because it does a great job of giving a strong overview of security analysis. I would recommend this book, especially for beginners and intermediate students and practitioners.

7 of 8 people found the following review helpful

5.0 out of 5 stars Warren Buffet would love this! October 14, 1998

By A Customer

Format:Hardcover

This book is a cross between a textbook for would- be security analysts, a how-to book for corporate execs and investors and an expose of the Wall Street security analysis profession. It's a great insider look at the secutiry analysis business and he tells many of the seamy hidden sides of the Wall Street business of valuing stocks. At the same time, Hooke provides a very practical outline of how the pros come up with prices for stocks.. He tackles many different kinds of securities, from hi tech stocks to the distressed variety.

The book does a good job of explaining things to the individual investor. It's a little complicated in the middle of the book, but I think most readers and investors can profit by his methodical approach.

A 1990's version of Warren Buffet would like the book because it adheres to a modern value approach. Too many of the books I read on stock selection are so basic that they don't help much. This ones is a good guide, and it also can assist execdutives that need to value their company stocks.

4 of 4 people found the following review helpful

5.0 out of 5 stars A Must-Read for Investors, Analysts, and Business Executives June 25, 2010

By TC

Format:Hardcover

After working as a writer in the investment field for more than 10 years, I found myself using terms such as "discounted cash flow" without thorough understanding of what they really mean or how business valuation is done.

Now, after reading Security Analysis and Business Evaluation on Wall Street, I feel very well equipped to delve into the value of an investment and to better understand the analysis done by others.

The author clearly has thorough knowledge of a professional with many years of experience in investment banking, but he explains the concepts clearly so that any investor or business student can understand and use them.

Plenty of case histories explore specific companies and industries. It also includes a timely and cogent analysis of the 2008 crash--a fiasco largely caused by phony analysis of risk and value.

The book also includes access to a website with excellent working spreadsheets for Discounted Cash Flow and other valuation models. They alone are more than worth the price of the book. They could save an analyst or investor countless hours--plus they provide a great hands-on feel for the concepts so aptly illustrated in the book.

4 of 4 people found the following review helpful

5.0 out of 5 stars Budding Bankers (and others) Beware NOT reading this Book May 17, 2010

By Afishbein

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.