Value Investing

Course Director: Kenneth Marshall

Value investors like Warren Buffett beat not only the stock market, but most other money managers as well. Why? What do value investors do that other investors do not? And if value investing works so well, why do so few money managers use it? This course covers the methods of analysis, projection, valuation and implementation that constitute the capital management strategy that performs best over the long term.

Format & Structure

Before each class, students will read portions of a listed company’s annual report and other relevant primary sources. The company will have been selected because its securities are currently being bought or sold by perennially overperforming value investors, as determined by annual reports, public filings with Finansinspektionen in Sweden, the Securities and Exchange Commission in the United States, and other financial supervisory authorities around the world.

Course Director

Kenneth Jeffrey Marshall has taught value investing at the Stockholm School of Economics since 2014. He also teaches value investing at Stanford University, and industry analysis at the University of California, Berkeley. He holds a BA in Economics/International Area Studies from the University of California, Los Angeles and an MBA from Harvard University.

Course administrator: Kirandeep.Saini@hhs.se

1. Efficiently generate value investment ideas;
2. Understand the essence of an issuer’s core business as the basis for meaningful analysis;
3. Assess an issuer's past performance by calculating return on capital employed and other key metrics;
4. Forecast an issuer's future performance by evaluating its competitive strengths and weaknesses;
5. Determine the value of an issuer's common stock;
6. Gain mastery over short term reporting, heuristics, and other drags on long-term returns; and
7. Understand price vs. value, margin of safety, and other key value investing concepts.

Students should be familiar with accounting, particularly the relationships between the balance sheet, income statement, and cash flow statement. Students should also know how to use spreadsheets in order to calculate key metrics. Most importantly, students should have the curiosity necessary to dive deeply into industries and corners of the world economy that neither their education nor experience to date has shown them.

Required book:

• Marshall, Kenneth Jeffrey, 2017, "Good Stocks Cheap: Value Investing with Confidence for a Lifetime of Stock Market Outperformance."

Optional books:

• Pabrai, Monish, 2007, "The Dhandho Investor: The Low-Risk Value Method to High Returns."
• Cialdini, Robert B., 2006 "Influence."

Attendance is critical. Grading is based on participation (50%) and a final paper (50%). Good participation means making comments and asking questions that, courteously and professionally, move everyone’s grasp of the case forward. The final paper is a short piece of original research on a value investment opportunity in a listed stock.

Find the course schedule in TimeEdit

Have you been granted educational support because of a documented disability? If so, please contact the course director as soon as possible so that adequate accommodations can be made.

Contact specialneeds@hhs.se if you have questions about being granted educational support or need a copy of your educational support certificate.

For more information, visit the Specific Educational Needs page on the Student Hub (login required).