Kuberin™
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Our methodology

Quality–value investing.

A practical framework for separating durable bargains from value traps. Durable economics first. Accounting quality second. Financial resilience third. Valuation last. The output is a research candidate, not a buy signal.

The research funnel

  1. Durable economicsROIC, incremental returns, margins, capital efficiency, competitive position
  2. Accounting qualityCash-supported, repeatable earnings; reconcile adjusted measures to GAAP
  3. Financial resilienceLeverage, coverage, liquidity, maturities and trough survival
  4. ValuationHistory + peers + intrinsic / expectations-based analysis
  5. Red-team the thesisTemporary weakness or permanent deterioration?
  6. Research candidateNever an automatic purchase decision

Cheap or deteriorating?

Potential genuine discount

  • Temporary demand correction
  • Stable share
  • Temporary margin pressure
  • ROIC remains above WACC
  • Credible investment depresses FCF
  • Long debt maturities
  • Valuation is cheap on normalized earnings and FCF
  • Measurable remediation

Potential value trap

  • Obsolescence or shrinking end market
  • Persistent share loss
  • Multi-year margin erosion
  • ROIC falls toward or below WACC
  • Weak cash conversion
  • Refinancing dependency
  • Cheap only on peak or adjusted earnings
  • Repeated guidance resets

Six-question red team

  1. What has to be temporary? List the assumptions required for earnings to recover.
  2. Who is taking share? Examine customers, volumes, pricing and product relevance.
  3. Trough valuation What does valuation look like on trough, not peak, economics?
  4. Twice as long Can the balance sheet survive if recovery takes twice as long?
  5. Cash reality Are earnings turning into cash?
  6. Falsification What evidence would break the thesis?

Practical starting points

Illustrative thresholds that open the investigation. They are not rules, and sector economics come first.

3–5 ptsNormalized ROIC above estimated WACC across most of a 5–10-year period
7 of 10Positive FCF years in the illustrative research screen
<2×Illustrative net leverage comfort level; sector economics matter more
>5×Illustrative interest coverage comfort level; not a universal rule

Quality: what to verify

Returns on capital
Evaluate ROIC against WACC and test whether new investment earns attractive returns.
Free cash flow
Examine consistency, margin, cash conversion, yield, FCF ROIC and diluted-share economics.
Earnings durability
Favor repeatable profits supported by cash, stable working capital and limited one-offs.
Balance sheet
Test normalized leverage, fixed charges, maturities, liquidity, covenants and refinancing risk.
Capital allocation
Reconstruct at least five years of reinvestment, M&A, debt reduction, dividends, buybacks and cash accumulation.

Capital allocation map

Where every dollar of operating cash goes, reconstructed over at least five years.

  1. Cash from operations
  2. Capex + M&A
  3. Debt reduction + dividends + buybacks
  4. Cash accumulation

Valuation: triangulate, don't anchor

  1. Own history

    Use 5-, 10- and full-cycle distributions for relevant multiples and yields; adjust for leverage, mix, accounting, rates, margins and growth.

  2. Relevant peers

    Match business model, capital intensity, cyclicality, growth, margins, ROIC, leverage and geography; compare valuation conditional on quality.

  3. Intrinsic value & expectations

    Use a DCF range, then reverse DCF to identify the growth, margins, reinvestment and terminal economics embedded in price.

Repeatable diligence workflow

  1. Build a clean universeSeparate non-comparable economics and unusable metrics
  2. Quantitative screenRank quality and valuation separately
  3. Primary-source verificationFilings, footnotes, MD&A, proxy and reconciliations
  4. Normalize & modelDownside, base and evidence-supported upside
  5. One-page pre-mortemDiscount rationale, contrary evidence, thesis-breakers and monitoring measures

Decision gates

A candidate must clear every gate. A strength in one area never offsets a failure in another.

01

Durability

Is this demonstrably a durable business?

02

Economic reality

Are earnings and cash flows real and financially resilient?

03

Expectations

Does valuation embed conservative assumptions versus normalized fundamentals and credible alternatives?

04

Safeguard

Unresolved moat or balance-sheet issues are gates, not points to average away.

“A screen should produce companies to investigate, never automatic purchase decisions.”

Educational only — not investment advice. This page describes how we research companies. The thresholds shown are illustrative starting points, not guarantees of quality or return.