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VALUE INVESTING MODELING
By Rafael Nicolas Fermin Cota
I first learned about value investing in Professor George Athanassakos' class at Ivey in 2005. It was only with the passage of time that I realized that my valuations were becoming messy spreadsheets with little holding them together other than loose assumptions and formulations. Worse, I had no faith in my own numbers, recognizing how easily I could move my intrinsic valuation by changing a number here and a number there.
The price tag we put on a business can only be as precise as the process that delivers it. The truth is that it is human nature to try to be in control and use numbers that serve us well in that pursuit. Since I was not comfortable with accounting, I realized I needed a smart framework to control the assumptions used in my valuations. This realization led me to start coding dynamic, data driven application systems for fundamental analysis.
In the past four years, my students have won all four major value investing awards at the Ben Graham Centre for Value Investing. It took us almost ten years of relentless work, but we managed to create something - something which could be held to the highest standards.
Below are the sample valuation methods that I have shared with my students throughout this journey: