We Ran
The Test.
Our DCF model says which stocks are overvalued and which are undervalued. We tracked 290 positions over 88 days to see if the market agreed. Here's what happened.
88-day excess return
Tested
Beat market
Overvalued fell
Not luck
Test period: October 6, 2025 – January 2, 2026 (88 days)
Long vs Short
Both signals generated alpha. But one stands out.
When our model says a stock is overvalued, it underperforms the market
7 times out of 10.
That's the edge.
Is It Luck?
A 70% hit rate sounds good. But is it real?
Translation: There's a 99.7% probability the alpha is real, not noise. The win rate (63% across 290 positions) has essentially zero probability of occurring by chance. The short signal win rate (70% across 153 positions) is statistically extraordinary.
It's not luck.
What The Ratings Measure
Each company is scored across 8 dimensions derived from our DCF analysis
How We Tested
Signal Generation
Each stock's fair value (from our DCF model) is compared to its actual Bloomberg price. If >10% undervalued → LONG signal. If >10% overvalued → SHORT signal.
150/50 Long/Short Model
150% exposure to undervalued stocks (LONG). 50% exposure to overvalued stocks (SHORT). Net exposure: 100%. This captures alpha from both sides of the signal.
Regime-Based Tracking
Each company has one active position at a time. Positions continue until the signal changes. This avoids double-counting when a stock is re-rated.
Benchmark: ASX 300
Alpha is measured against the S&P/ASX 300 Index. During the test period, the ASX 300 returned -2.28%. The strategy returned +4.91%.
Where The Edge Works
Signal performance across different market segments
Large caps have higher win rates. Mid-caps offer more opportunity. The edge works across the market.
Implied Annual Alpha
Not a forecast. The edge is the relationship — if it holds across regimes.
How to read this: Alpha is the period excess return over the benchmark (industry standard). Returns can be annualized; alpha represents the edge. If the relationship between our signals and stock performance persists across market regimes, the implied annual alpha falls in this range. This assumes persistence — which is unproven over longer timeframes.
What We Don't Know Yet
Our position: The signal has statistically significant predictive power. We're not claiming it will always work. We're showing you what happened and letting you decide.
The Logic
Each rating is derived from the underlying analysis — the same analysis you can read for free on every company page. The ratings are the conclusions of that analysis, distilled into 8 measurable factors.
The signal is simple: when market price diverges significantly from our DCF fair value, mean reversion tends to occur. Undervalued stocks rise. Overvalued stocks fall. Not always, but often enough.
It's not magic. It's not a black box. You can read our analysis, see our fair values, and decide whether our logic makes sense. The performance data shows what happens when you systematically act on that logic.
The Story in One Breath
We tested 290 positions across 283 stocks over 88 days.
The portfolio returned +4.91% while the ASX 300 fell -2.28%.
That's +7.2% alpha. Nearly two-thirds of our calls beat the market.
The shorts hit 70% of the time.
Statistical confidence: 99.7%. Not luck.
The model identifies mispriced stocks.
The market corrects them.
You've seen the edge. Now see the signals.
The analysis behind every rating is free — read any company page and verify our logic.
The ratings themselves tell you which stocks are mispriced right now.
We showed you the data. You decide if you want in.