skills/initiating-coverage/references/thesis-framework.md

# Thesis Framework

## The initiation must answer the PM questions

1. What is the central underwriting question?
2. What is mispriced or misunderstood?
3. What evidence supports our view?
4. What evidence would disprove it?
5. What will change investor expectations?
6. What is the path to return?
7. What is the downside if wrong?
8. How does valuation compensate for the risk?

## Thesis quality bar

A strong thesis is:
- specific: tied to measurable drivers,
- variant: different from consensus or sharper than consensus,
- falsifiable: clear disconfirming signals,
- financial: tied to estimates, cash flow, multiples, or balance sheet,
- timed: has catalysts or time horizon,
- risk-aware: knows the most dangerous counterargument.

## Common thesis types

### Quality compounder

Core question: can the company reinvest at high returns for longer than expected?

Watch:
- organic growth durability,
- incremental margins,
- retention / pricing power,
- reinvestment runway,
- capital allocation.

### Turnaround / margin expansion

Core question: is the margin bridge real or just cyclical noise?

Watch:
- cost saves executed vs promised,
- mix shift,
- restructuring costs,
- revenue leakage,
- operating discipline.

### Cyclical recovery

Core question: where are we in the cycle and how much is priced in?

Watch:
- volume indicators,
- pricing/spreads,
- inventories,
- end-market demand,
- operating leverage.

### Estimate revision

Core question: are numbers too low or too high?

Watch:
- leading KPIs,
- bookings/backlog/RPO,
- price/cost trend,
- guidance conservatism,
- consensus dispersion.

### Multiple re-rating

Core question: what unlocks a higher or lower multiple?

Watch:
- growth/margin consistency,
- business mix,
- capital returns,
- index inclusion,
- governance,
- narrative shift.

### Special situation

Core question: does the event change value or merely timing?

Watch:
- merger approval,
- spin economics,
- litigation/regulatory decisions,
- restructuring steps,
- capital allocation.

## Debate table template

| Debate | Consensus view | Our view | Evidence | Disconfirming signal | Next catalyst |
|---|---|---|---|---|---|
| [driver] | [what market believes] | [variant view] | [source-backed facts] | [what breaks thesis] | [date/event] |

## Thesis Scorecard

Score variant perception, evidence strength, valuation support, catalyst path, downside mechanism, timing, ownership/positioning, benchmark relevance, and falsifiers. Do not recommend without measurable disconfirmers and a downside case.