Commercial Real Estate Valuation: Cap Rate Approach

Real Estate 101

by Karl - April 1, 2019April 1, 20190

Fundamental valuation of commercial real estate is similar to fundamental valuation of a stock, the intrinsic value of the property depends on the cash flows that it generates. This is known broadly as the income approach to valuation, which can be further broken down into 3 variations: Cap rate approach

Luxury Goods Industry Primer

Consumer & Retail

by Karl - March 18, 2019March 18, 20190

The luxury goods industry is a core industry within Consumer & Retail. Depending on its definition, specifically whether or not it includes luxury cars and hospitality, the market size of the luxury goods industry ranges from $200 billion to $1.2 trillion. We will focus on the core luxury goods industry

APV Method: Adjusted Present Value Analysis

Finance 101

by Karl - February 18, 20190

The standard Discounted Cash Flow (DCF) method is the typical tool used to value firms, but one drawback its inability to handle changing debt to equity levels. As we know, higher debt offers a higher tax shield, which in turn increases both firm value and equity value. To explicitly account

Introduction to Capital Structure

Finance 101

by Karl - February 17, 2019March 3, 20190

Firms can choose to finance themselves with a number of securities: shares, bonds, preferred shares, convertible bonds, etc. These securities can be classified into two broad categories, debt and equity, and each comes with its own cost. Capital structure describes the way a firm finances itself. Data from Statistics Canada, 2009 Capital

Stock Pitch: Long Canada Goose (TSE:GOOS)

by Karl - February 10, 2019March 10, 20190

This stock pitch is intended to be a resource for interview preparation, it should not be interpreted as investment advice. I recommend a long position on Canada Goose. Currently trading at $74.56, I believe it is undervalued as investors overreacted on Huawei news and the subsequent breakdown of Canada China relations.

Value Capture Model

Finance 101

by Karl - January 20, 20190

Porter's five forces, founded in the 1980's, is the classical framework used to understand and analyze competitive forces in an industry. In the 1990's, a new framework was formed, the Value Capture Model. The Value Capture Model extends on previous frameworks in two ways. One, it formally describes competition as a

Statistical Inference and Hypothesis Testing

Statistics 101

by Karl - December 9, 2018December 31, 20180

Whenever we observe data, we are usually observing one or a few samples from a much larger population. For example, if we are looking at daily stock market returns for AAPL for last year, we are looking at only a small portion of the overall daily returns. More often than

Interview With A Mergers & Acquisitions Investment Banker – Part II

by Karl - December 9, 2018December 9, 20180

What sector is interesting right now? Oil and gas. Despite the current oil price environment (which is very bad), you are actually seeing a fair bit of consolidation in the space because of the efficiencies of scale in the space. The oil prices are low and there is a lot of uncertainty right

Interview with a Mergers & Acquisitions Investment Banker – Part I

by Karl - December 9, 2018December 9, 20180

Why does everyone want to do M&A? M&A is probably the most flexible group in terms of exit opportunities and gives you the broadest and most technical experience. You will get the most modelling experience in M&A, but I would caveat that it is not as interesting as people seem to think

Multivariate Regression and Interpreting Regression Results

Statistics 101

by Karl - December 3, 2018December 31, 20180

Simple linear regression (univariate regression) is an important tool for understanding relationships between quantitative data, but it has its limitations. One obvious deficiency is the constraint of one independent variable, limiting models to one factor, such as the effect of the systematic risk of a stock on its expected returns.