Financial / Bank
Banks, insurers and other balance-sheet businesses — where the product is risk and capital is the inventory.
Book-value compounding with normalized credit losses. Residual income model dominates; capital-return discipline is the moat.
Banks, insurers and other balance-sheet businesses don't fit the free-cash-flow frame — their product is risk, their inventory is capital, and their earnings depend on the spread between the return on equity and its cost. Applying a standard DCF to them produces confident nonsense.
We value them on returns to equity and book value rather than on cash flow to the firm, and we treat credit quality and capital adequacy as first-order questions, not footnotes. A franchise that compounds book value through a credit cycle is worth far more than one that simply earns well at the top of it.
The questions that move the call for a financial / bank — applied consistently across every name in the archetype.
Return on equity vs. cost
The spread between sustainable ROE and the cost of equity drives the premium or discount to book value.
Credit cycle & provisions
Where are we in the credit cycle, and is the company reserving honestly or flattering current earnings?
Capital adequacy
Buffers are what let a balance-sheet business take risk without becoming the risk; we watch them closely.
Book-value growth & payout
Long-run value comes from compounding book value per share while returning the surplus at sensible prices.
Example reports
How the archetype lens reads in practice — free to open in full.