Investment approach

Fundamentally driven. Bottom-up.

The whole market, one company at a time.

Philosophy

AlphaGen Insights is fundamentally driven and bottom-up. A share is a claim on a business, a business has a value that can be estimated from its accounts with care, and price and value part company often enough to make the estimate worth doing. The research exists to make that estimate for every listed company in a covered market and to state plainly where the price sits relative to it.

The work is bottom-up. Each assessment starts from the company’s own reporting, not from a view on rates, sectors or the cycle. Years of annual and interim reports are read before a number is written down.

Quality comes before price. A company has to clear a quality bar before its price is of any interest. A cheap share in a poor business is not an opportunity; it is a pass.

Estimates are conservative by default. They rest on what a business has already demonstrated rather than on what it might do. Growth is not paid for in advance. Where outcomes range widely, the downside carries more weight than the upside. A margin of safety separates the estimate of value from the price at which a purchase would be considered defensible, and it widens as a business’s competitive position weakens.

Most companies, most of the time, are passes. The ratings are meant to reflect that, not to generate ideas for their own sake.

How the research is produced

Coverage is the full list of companies on each covered exchange, not a screened subset, so the smaller and less followed names receive the same attention as the index constituents. Every assessment is built from primary sources: the audited annual reports and the interim reports as filed with the exchange. Every company is held to the same standard, and each valuation is checked and, where there is doubt, adjusted in the conservative direction before it is published.

Reading the dashboard

It reflects the durability of the business: the consistency of its earnings and cash generation, the strength of its balance sheet, its competitive position, and how well it has been run and owned. A high tier is earned over years, not by a good year.

It places the market price against the fundamental valuation.

Quality is a hard gate: a company that fails it is excluded whatever its price. Buy requires high marks on both scales with a margin of safety in the price. Attractive requires strong marks on both. Mediocre pairs one strong with one middling. The rest are Below.

Excluded also covers businesses that fall outside the approach on principle, such as turnarounds, businesses too complex to assess with confidence, and companies whose earnings are not supported by cash.

Figures on the dashboard

Book value

Book value per share.

Intrinsic value

The estimate of what the business is worth per share under conservative assumptions.

Catalyst value

Intrinsic value adjusted for identified catalysts; it can be lower as well as higher.

Entry price

The price at or below which a purchase would be considered defensible.

% to entry

The distance from the current price to the entry price; a negative figure means the share trades above it.

Coverage

Markets are curated, and more are added over time. Within each covered market, coverage is the full list of listed companies. A company shows as researched once it has been through the complete assessment.

What this is not