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Practitioners’ Insights: Learn more about quantitative approaches to valuation and portfolio construction

CFA Institute Live Webinars
Presentation
 Recorded 20 July, 2023

Overview

Quantitative approaches to estimating intrinsic value often begin and end with discounted cash flow (DCF) models, which can be applied meaningfully to only a handful of companies that generate stable free cash flows. Many companies lie outside this universe of mature free-cash-flow generators.

This webinar will discuss alternative quantitative approaches that can be applied to estimate the fair market value of a larger universe of stocks. Although every investor who researches a company develops some understanding of the business fundamentals and forms expectations about the outlook of the business, these models will help you translate the narratives into mathematics.

The second part of the webinar will discuss position sizing. We often get carried away by the percentage of returns that we make on a stock. What ultimately matters is the return generated by the portfolio, and in this context, position sizing is critical. We will discuss a quantitative approach to position sizing that can help you reduce the role of emotions in decision making.

Learning Outcomes:

  • Explore quantitative approaches other than conventional DCF that can be used for stock valuation.
  • Learn how much you pay for a stock based on your analysis of the underlying business.
  • Discuss ways to recalibrate your expectations based on the new information that is available.
  • Gain an understanding of which stock to sell, how much to sell, and how to maintain positions based on estimates of intrinsic value of the stocks in a portfolio.

This is the archived version of a live webinar that took place on 20 July 2023

About the Speaker(s)

Sharad Ramnarayanan
Appointed Actuary, The New India Assurance Company Limited
Sharad S Ramnarayanan is a qualified general insurance actuary currently working as the Appointed Actuary of The New India Assurance Company Limited in Mumbai. He did his Chemical Engineering from ICT, Mumbai and PGDM from MDI, Gurgaon. He is also a certified Financial Risk Manager (FRM) from GARP (London).

Prior to joining The New India Assurance Company Limited Sharad has worked as an investment professional in Birla Sunlife Asset Management Company Limited, Pari Washington Company Advisors Pvt. Ltd. and Tactica Capital Management. He has also worked as a Finance professor at the Asian School of Business. An avid reader, Sharad has also authored two books Quantitative Value Investing: A practitioner's approach to stock valuation and Retire with dignity: A do it yourself retirement guide for the 40+ and these books are available on e-commerce sites like Amazon and Flipkart.

Sharad considers Prof. Sanjay Bakshi who was his teacher at MDI and with whom he was later associated with as a part of Tactica Capital Management as someone who has had a major influence on his life as well as investment journey.
Sharad S Ramnarayanan
Sivananth Ramachandran , CFA, CIPM
Director of Capital Market Policy, India, CFA Institute
Sivananth "Siva" Ramachandran, CFA, is the Director of Capital Markets Policy, India at CFA Institute. In his role, he is responsible for advocating policy positions on issues that impact Indian capital markets, including corporate governance, ESG, and financial reporting, to name a few. Siva was part of a SEBI working group that reviewed the related party transaction regulations. He is frequently quoted in media. Siva has nearly 13 years of experience in financial services. Prior to joining the CFA Institute, he spent five years at Morningstar, and led their global index product development team. He also served as a spokesperson for sustainability at Morningstar India. Prior to his time at Morningstar, Siva spent nearly five years at MSCI where he co-authored research papers on small cap investing, portfolio construction, and economic exposure. Siva has an MBA from the Indian Institute of Management, Lucknow. He also holds the chartered financial analyst (CFA) and professional risk management (PRM) designations, and the fundamentals of sustainability accounting (FSA) credential provided by the Sustainability Accounting Standards Board (SASB).
Sivananth Ramachandran

1 PL Credit

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