"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
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. For example, the author discusses how to read what is purported to be an excerpt of the loss reserve table from the financial statements (this is also an incomplete, overly simplified depiction of the tables which are much more complicated in reality). However, the author doesn't go the next step to explain clearly as to how this information can be used in the valuation exercise.
Part Five is also pretty weak. For example, the author spends time giving his opinion on the "causes" of 2008 crash, which I think would have been better spend discussing valuation issues during the crisis.
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.
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
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.
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.
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
More Details about Security Analysis and Business Valuation on Wall Street + Companion Web Site: A Comprehensive Guide to Today's Valuation Methods, Wiley Finance 2nd edition
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