The Leoside Equity research methodology

We believe sustainable market outperformance stems from rigorous, independent bottom up analysis coupled with a clear understanding of macroeconomic catalysts. Our daily research reports are built on a four pillar framework designed to separate market hype from fundamental value.

What gets covered

Three markets across the week, with the four pillars below applied to every report. What changes between them is the altitude, not the method.

Most reports examine one listed business closely. Some pull back to a sector or to a market as a whole, where the same four questions are asked of many companies at once: aggregate earnings quality rather than one income statement, structural position rather than one firm's moat, valuation against history rather than a single discounted cash flow. A company read without the conditions it operates in is half a picture, and a view on a market that never touches a balance sheet is the other half.

1. Quantitative foundation, the numbers

We start by stripping away market sentiment to analyse the raw financial health of a business.

• Quality of earnings. We audit revenue growth sustainability, operating margins and free cash flow conversion rather than relying solely on headline net income.
• Balance sheet resilience. We evaluate debt maturity profiles, liquidity ratios and capital allocation efficiency (ROIIC and ROIC) to establish whether a company can weather a macroeconomic downturn.

2. Qualitative moat assessment, the business

A great spreadsheet does not make a great business. We look deep into a company's competitive advantage to determine its long term viability, and at sector or index level we ask the same question of the whole group: what protects these earnings, and from whom.

• Pricing power. Can the company raise prices in an inflationary environment without losing market share?
• Structural moats. We analyse network effects, switching costs, regulatory barriers and intellectual property that protect the firm from disruption.

3. Valuation and margin of safety

We reject growth at any price. Every report anchors its thesis on valuation.

• Intrinsic modelling. Using standardised discounted cash flow frameworks and relative valuation multiples such as EV/EBITDA and price to earnings relative to growth, we establish a clear baseline for what a company is actually worth.
• The margin of safety. We look for asymmetric risk and reward setups where the current market price significantly undervalues the underlying cash generating potential of the firm.

4. Catalyst identification, the timing

An undervalued stock can stay cheap for a long time without a catalyst. Our research pinpoints the upcoming inflection points that will force the market to reprice the asset, such as:

• Margin expansion milestones
• Product cycle launches or regulatory approvals
• Capital structure changes or operational turnarounds