The course has two parts. The first part (14 to 16 lectures) develops the essential tools that a security analyst needs, including basic capital market concepts, competitive analysis, valuation methods, and techniques for proper decision making. The second part (8 sessions) allows the students to apply the lessons they have learned by presenting a thorough analysis of a company and an investment conclusion regarding the shares of the company.
A representative of a major corporation will join the class near the end of the first section. This session will give students the opportunity to question a management team directly on all facets of corporate strategy. Further, accomplished portfolio managers will be invited to attend student presentations to provide constructive feedback, share their insights into the security analysis process, and answer questions.
A key skill for an analyst is to be able to clearly and persuasively make a case for the purchase or the sale of a particular security based on well-reasoned analysis. To make all class presentations more realistic, the class will participate by acting as portfolio managers. Further, following each presentation, each student will elect whether or not to follow the investment recommendation of the presenting group.
The course co-requisite is (B6302) Capital Markets. Early in the semester, some of the material will overlap with finance courses. You can view this material as the opposite side of the same coin, and it is intended to firmly establish a foundation for the course’s key tenets. While an understanding of basic finance is important, the course is designed to develop concepts in a way that is intuitive, practical, and operational.
Columbia Business School has a terrific tradition of teaching security analysis. This course, at its best, is both practically oriented and intellectually stimulating. Two quotes sum up the proper attitude going into this course. The first is nullius in verba, which means “take nobody’s word for it; see for yourself.” Security analysis is not a science (although a few of the tenets are reasonably well established) and we have a lot to learn. You must always actively seek to better understand the process, and you can be assured no one is going to offer you the answers. The second quote is non notationes, sed notions, which translates to “not notations, but notions.” Corporate finance is too often taught by laying out formulas, without enough consideration of what those formulas mean (or were meant to explain). We should all do our best to perpetuate the fine tradition of security analysis at CBS.
Adjunct Professor of Business
Michael J. Mauboussin is Head of Consilient Research at Counterpoint Global. Prior to joining Counterpoint Global in January 2020, he was Director of Research at BlueMountain Capital Management in New York. Before joining BlueMountain, he was a Managing Director and Head of Global Financial Strategies at Credit Suisse. Before rejoining Credit Suisse, he was Chief Investment Strategist at Legg Mason Capital Management from 2004-2012. Mr...