Methodology
Methodology
How each report is built: what fair value means here, how the bands and ratings are defined, and what every report commits to at publication.
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COVERAGE
Coverage centers on the AI value chain, with memory and logic semiconductors as the primary focus and adjacent work on AI infrastructure, power, and defense. Names in financials, healthcare, and materials enter coverage when a specific valuation dislocation warrants the work. Where a company has both a US and a Korean listing, the two securities are covered separately, because the wrapper and the underlying can carry different prices for the same business.
Coverage centers on the AI value chain, with memory and logic semiconductors as the primary focus and adjacent work on AI infrastructure, power, and defense. Names in financials, healthcare, and materials enter coverage when a specific valuation dislocation warrants the work. Where a company has both a US and a Korean listing, the two securities are covered separately, because the wrapper and the underlying can carry different prices for the same business.
FAIR VALUE
Fair value is a function of earnings, not price. For cyclical businesses it blends a through-cycle floor with a structural ceiling, weighted by the composition of current earnings. For others it applies a multiple to a forward earnings or free cash flow estimate. Multiples are anchored to the company's own full-cycle history, to dated external peer compilations, and to the interest rate regime, never to the stock's own recent price history.
Fair value is a function of earnings, not price. For cyclical businesses it blends a through-cycle floor with a structural ceiling, weighted by the composition of current earnings. For others it applies a multiple to a forward earnings or free cash flow estimate. Multiples are anchored to the company's own full-cycle history, to dated external peer compilations, and to the interest rate regime, never to the stock's own recent price history.
A fair value that tracks the price would move the entry line with the price and could never be reached; every report therefore prints the ratio of fair value to the current price as a self-check, and a ratio close to 1.0 is treated as a warning, not a confirmation. Fair value changes only when the earnings assumptions change. It does not change because the price moved or because another house moved its target.
A fair value that tracks the price would move the entry line with the price and could never be reached; every report therefore prints the ratio of fair value to the current price as a self-check, and a ratio close to 1.0 is treated as a warning, not a confirmation. Fair value changes only when the earnings assumptions change. It does not change because the price moved or because another house moved its target.
VALUATION BANDS
Each report defines six price bands as fixed multiples of fair value. The multiples are fixed at publication; the bands move only when fair value, the structure adjustment, or the share count changes.
Each report defines six price bands as fixed multiples of fair value. The multiples are fixed at publication; the bands move only when fair value, the structure adjustment, or the share count changes.
RATINGS
Each report carries one of five ratings. A rating is a judgment on quality and price together; the action lines (entry level, sell baselines) are set by the bands and the payoff ratio, so a rating can stay unchanged while the action changes.
ENTRY LEVEL AND SELL BASELINES
The entry level is the top of the accumulation range, 0.80 × fair value, or lower where the report narrows the bands. It is checked against a payoff ratio: the probability-weighted gain above the price divided by the probability-weighted loss below it, taken from the report's scenario table.
The entry level is the top of the accumulation range, 0.80 × fair value, or lower where the report narrows the bands. It is checked against a payoff ratio: the probability-weighted gain above the price divided by the probability-weighted loss below it, taken from the report's scenario table.
New buying requires a payoff ratio of at least 1.5 at the entry level; if the band opens but the ratio fails, the report says so and no entry is given. Sell baselines are the prices at which the payoff ratio falls to 0.667, 0.40, and 0.286, corresponding to a first trim, a second trim, and a full review. When the payoff ratio and the band trim line disagree, the stricter of the two governs.
New buying requires a payoff ratio of at least 1.5 at the entry level; if the band opens but the ratio fails, the report says so and no entry is given. Sell baselines are the prices at which the payoff ratio falls to 0.667, 0.40, and 0.286, corresponding to a first trim, a second trim, and a full review. When the payoff ratio and the band trim line disagree, the stricter of the two governs.
SCENARIO ANALYSIS
Every report carries a scenario table with values and probabilities that sum to 100%. The probability-weighted value is printed beside fair value and is not the same number: fair value is the earnings-based estimate, the probability-weighted value is what the scenario tree implies. The price at which the payoff ratio equals 1.0 must match the probability-weighted value; each report checks this and prints the check.
Every report carries a scenario table with values and probabilities that sum to 100%. The probability-weighted value is printed beside fair value and is not the same number: fair value is the earnings-based estimate, the probability-weighted value is what the scenario tree implies. The price at which the payoff ratio equals 1.0 must match the probability-weighted value; each report checks this and prints the check.
REPORT STANDARDS
Every report commits, at publication, its fair value, entry level, sell baselines, rating, and the conditions under which the rating would change in either direction. Each report stands alone with its own data as of the publication date and is not revised afterward; a changed view is a new report. Every figure traces to a primary source, and the source and date are printed with the figure.
Every report commits, at publication, its fair value, entry level, sell baselines, rating, and the conditions under which the rating would change in either direction. Each report stands alone with its own data as of the publication date and is not revised afterward; a changed view is a new report. Every figure traces to a primary source, and the source and date are printed with the figure.
Each report also prints the range that fair value and the entry level take when the key inputs are perturbed (5th to 95th percentile), so the entry level is read as an estimate with a stated width, not a point. Peer multiples are taken from dated external compilations, not from the covered company's own price history.
Each report also prints the range that fair value and the entry level take when the key inputs are perturbed (5th to 95th percentile), so the entry level is read as an estimate with a stated width, not a point. Peer multiples are taken from dated external compilations, not from the covered company's own price history.
The author receives no compensation for any report, has no business relationship with any company covered, and may hold positions in securities discussed.
The author receives no compensation for any report, has no business relationship with any company covered, and may hold positions in securities discussed.
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