DCF
BNY Mellon Alcentra Global Credit Income 2024 Target Term Fund, Inc.
stock NYSE

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I’m very bullish on **Auddia Inc. ($AUUD)** as a near-term asymmetric merger catalyst play. This is not just a random microcap runner; AUUD has a signed definitive merger agreement, a recently completed financing, a tight market-cap setup, and a clear Q2 2026 transaction timeline that could force the market to reprice the stock if execution continues.
As of the latest market data available to me, AUUD is trading around **$1.68** with a market cap of roughly **$2.5 million**, which is extremely small relative to the company’s own announced post-merger valuation framework.
**The core**
Auddia entered into a **definitive merger agreement** with Thramann Holdings on **February 17, 2026**, creating a new holding company structure called **McCarthy Finney**, expected to trade under ticker **MCFN** if the transaction closes. The structure would combine Auddia with Thramann-controlled AI-native assets including **LT350, Influence Healthcare, and Voyex**.  
The company has said the proposed transaction is expected to close in **Q2 2026**, subject to shareholder approval, S-4 effectiveness, customary closing conditions, and continued Nasdaq listing for the combined company.  
That timing matters. We are already in May 2026, so the window for merger-related filings, shareholder vote mechanics, and closing updates is potentially very close.
**Why I think the setup is explosive**
The biggest catalyst, in my opinion, is the company’s announcement that it completed a **$12 million financing** and framed that financing as a way to accelerate the McCarthy Finney merger process. Auddia specifically said the financing positions it to accelerate closing of the merger and support steps such as the S-4 registration statement and shareholder vote process.  
That is important because earlier merger terms reportedly included Auddia maintaining at least **$12 million in cash at closing**, so this financing appears to address a key closing condition.  
Now compare that with the valuation disconnect: Auddia has discussed an internal **$250 million base-case DCF valuation** for the post-merger company, with roughly **50% attributed to LT350**. Even allowing for major skepticism and dilution, the current AUUD equity value is still tiny relative to the company’s stated post-merger valuation narrative.  
**The LT350 AI infrastructure**
LT350 is the asset I think could capture speculative market attention. Auddia has described LT350 as a distributed AI datacenter model using modular compute infrastructure deployed above parking lots, pitching it as an alternative to traditional datacenters that face constraints around power, water, and land.  
Whether the market ultimately accepts the full valuation is a separate question, but the narrative is clear: **AI infrastructure + datacenter constraints + public listing + microcap float dynamics**. That combination is exactly the kind of setup that can attract momentum traders when a definitive closing path becomes visible.
**The squeeze component**
I am not looking at AUUD as a clean fundamental blue-chip story. I am looking at it as a **near-term event-driven dislocation**.
The ingredients are:
**Tiny market cap**
**Merger expected in Q2 2026**
**$12 million financing completed**
**AI/datacenter rebrand into McCarthy Finney**
**Potential ticker change to MCFN**
**A recent reverse split that reduced outstanding share count**
**High volatility and trader attention around merger/news releases**
Auddia completed a **1-for-7.7 reverse split** effective before the market opened on **April 1, 2026**, with shares outstanding expected to fall from roughly **3.9 million to about 500,000** at that time, before subsequent financing effects.  
That kind of capital structure can make the stock highly volatile. Any confirmed S-4 filing, shareholder vote date, Nasdaq compliance update, merger closing date, or new McCarthy Finney asset disclosure could create a sharp liquidity event.
**My bullish idea**
The market is still treating AUUD like a distressed legacy microcap, but the company is trying to transform into a public AI holding company with a stated post-merger valuation framework far above the current market cap. The recent financing makes the merger pathway more credible, and the Q2 closing target means catalysts could arrive quickly.
For me, the bull case is not that every internal projection is guaranteed. The bull case is that the **risk/reward is massively asymmetric** if the market begins pricing AUUD as a live AI infrastructure merger vehicle instead of a forgotten microcap.
**price targets**
For a speculative merger squeeze setup like $AUUD, I would not value this purely on current trailing fundamentals. The near-term bull case is about **event-driven repricing**, **float dynamics**, and whether the market begins assigning value to the proposed McCarthy Finney AI infrastructure platform.
Using the recent trading area around **$1.50–$2.00** as a reference zone, my bullish scenario targets are:
**Conservative bullish target:**
**$4–$6**
This would represent a first-stage rerate if the market starts pricing in a higher probability that the merger closes. A move into this range could be triggered by an S-4 effectiveness update, shareholder meeting announcement, Nasdaq compliance clarity, or additional McCarthy Finney / LT350 disclosures.
At this level, AUUD would still likely be trading at a relatively small valuation compared with the company’s stated post-merger valuation narrative.
**Strong bullish target:**
**$8–$12**
This is where I think AUUD could trade if merger momentum combines with real volume and speculative attention. A confirmed vote date, closing timeline, ticker-change anticipation, or major AI/datacenter narrative traction could push the stock into a more aggressive squeeze range.
Given the low market cap and tight structure, this kind of move does not require the market to fully believe the entire post-merger valuation. It only requires traders to start assigning a meaningful probability to the combined company becoming a public AI infrastructure vehicle.
**High-conviction squeeze target:**
**$15–$25+**
This is the aggressive upside scenario. I think this becomes possible if AUUD gets a clean sequence of catalysts: shareholder approval, merger closing confirmation, Nasdaq continuity, ticker change to **MCFN**, and renewed market focus on LT350’s distributed AI datacenter angle.
In that scenario, the trade could stop being valued like legacy Auddia and start being valued as a newly public AI infrastructure holding company. If momentum traders pile in around the closing window, a temporary overshoot is possible.
**Blue-sky target:**
**$30+**
This is not my base case, but it is the true squeeze / mania scenario. It would likely require a combination of merger completion, extremely thin supply, aggressive market attention, and the market giving real speculative credit to the company’s internal post-merger valuation framework.
For me, this is the “everything hits at once” target — not something to assume, but something that explains why the setup is asymmetric.
**My personal bull-case framework**
My base bullish target range is **$8–$12** if the merger path continues cleanly.
My aggressive squeeze target is **$15–$25+** if closing-related catalysts hit in rapid succession and volume expands.
My blue-sky target is **$30+** only if AUUD becomes a full-blown AI infrastructure momentum trade into the McCarthy Finney transition.
**Bottom line**
$AUUD looks like a near-term merger catalyst trade with squeeze potential, not a slow fundamental compounder. The combination of a tiny market cap, completed $12 million financing, Q2 2026 merger target, AI infrastructure narrative, and McCarthy Finney re-rating potential makes this one of the more interesting speculative setups on my watchlist.
Not financial advice. 

GME EBAY Merger DCF - Dilution or Accretion?

piggyback on this thread after I've done more backtests (different discount rate, terminal growth, etc). What's consistent is that the wrong forecast of future cash flow will affect price return down the road, as the post shown. Your point of DCF being sensitive to cost of capital etc is also true. However, if we use the same discount rate for all stocks, the market will misprice \~50% of the stocks at any given time! The market is not efficient in this sense. That's why value investing works so well! I will share the new post soon. Moreover, I've updated this post to include two variables: 1) what if we use the Beta-deduced discount rate for each stock. 2) Does being cheap alone explain the price performance. Feel free to check it out from the link if you guys are interested.

Disclaimer: I have no idea what I'm doing.
I originally had the same thoughts about CROX. I bought in the low 100s in early 2025. I bought more when it dropped below 80 and I wish I had more cash to buy more at the time.
When I actually sat down and did a DCF to the best of my knowledge, I was getting a fair value closer to 75-80. My thesis was that, for the reasons you mentioned, there would be a re-rating and the stock would eventually recover in the next couple of years. I do not believe in it as a long term compounder, this was a short term play for me.

A while ago I posted here about [American Integrity Insurance](https://www.reddit.com/r/ValueInvesting/comments/1rwyl0o/is_buying_american_integrity_insurance_aii_just/) and how I believed that the market was expecting a return to 'normal' hurricane levels but was pricing it as if there would be both a disastrous level of hurricanes in future and that AII would fail to navigate that.
Whilst I was confident in my thesis that AII was undervalued, a key part missing from my analysis was setting reasonable price targets. In part this was due to my previous analysis being focused only on whether AII was fairly valued or not, but it was also due to my mistrust of (and hence inexperience with) discounted cash flows and all the assumptions required to construct them.
In the post below I lay out the different price targets I have set, and the assumptions behind the model to construct each one. In all cases I believe I have taken the more conservative assumption in order to come up with an estimate that I feel is 'safe'. This doesn't lead to a high-energy post about how this stock could 10x, but I believe gives a cautious view on a company that has executed well in recent years and could stand to beat the price targets by continuing to perform.
The summary of the price targets are in the table below. If you're curious about how these price targets came to be, then read further.
|Price Target|Price/share|
|:-|:-|
|Asset value (base case)|$16|
|DCF (0 Growth)|$23.76|
|DCF (Limited Growth)|$26.81|
|DCF (Carolina Expansion)|$28.13|
|"Fair" P/B Valuation|$32|
# Base Case (Balance Sheet)
The book value reported in the last earnings report of $337m (giving a P/B of about 1.1 at the time) took little adjustment to come up with a base value. I reduced the Premiums Receivable by an amount equal to AII's credit provision for losses and, importantly, reduced their cash balance by the $20m dividend that would now be paid.
A few bonus points to note here. Firstly, AII has no debt, meaning the balance sheet is a nice clean reflection of the business and means the RoE calculations for an insurer are a more reliable indicator. Secondly, the balance sheet doesn't have any Goodwill or Intangible Assets, something else that can muddy a balance sheet.
This adjustment leads to around $313m in equity, and a base case of $16/share.
# DCF Model - Intro
The method of calculating a DCF for an insurer is really a DNI (discounted net income), looking at the distributable profits. In creating a DCF model there are always a number of assumptions to be made which I detail below:
**Payout Ratio** for the DCF is calculated as 45%, based on a $45m payout for 2025. This was calculated as $20m dividend and $25m buyback on $99.6m net profit. The results of pricing depends highly on this payout ratio.
**Cost of Equity** is set at 11.5%, calculated as a combination of a risk free rate of 4.2%, a risk premium of 5.8% and a small cap premium of 1.5%.
**Ceded premiums** were previously \~73% of gross premiums earned, but in the recent earnings call AII highlighted the new earnings share agreement for next year, which equated to around 62%.
**Expense Ratio** is estimated at 30%. Whilst AII managed to achieve an expense ratio of 25% in 2025, and I would not expect the company to become *less* efficient over time, I wanted to allow for a more conservative value more in line with other insurers.
**Loss Ratio** is estimated at 45%. This is actually fairly close to AII's 2024 value (of 47.9%) which was achieved even during an abnormally high hurricane activity year, and feels like a safe conservative level to project.
That brings the estimated **Combined Ratio** to 75%, sitting in between AII's two previous abnormally low (63%) and high (80%) years.
I keep project any other factors, such as policy fee income, tax rates, simply based on the average of previous years.
# DCF - 0 Growth
The first case to look at is a scenario where there is no growth in the company at all. In other words, how much is the future cash worth if the company is just maintaining year on year.
This may not be such an unreasonable assumption. AII's rapid growth in the last few years was largely due to policy take-outs from Citizens, a process which is mostly completed and AII do not expect to take on a significant number of future policies. Indeed the total income from 'Voluntary' premiums was relatively stable for the last 3 years.
Setting a growth in gross premiums written to 0 actually leads to a small drop in net income from 2025 (due to my conservative expense and loss ratios), but still values those cash flows at **$23.76**.
# DCF - Limited Growth
For the Limited Growth scenario I add two growth factors. The population growth in Florida is estimated at approx 1.28%. I add this to forecast GDP growth for each year to obtain growth rates for each year varying between 3-3.4%.
Adding this growth each year to the top line Gross Premiums Written, increases the price target to **$26.81.**
# DCF - Carolina Expansion
Where AII is really most likely to gain growth is in its new expansion into the North Carolina market. As a new market entry this is much harder to estimate initially, but I took the following figures.
The average policy sits around **$3100**, and I estimated AII to take out around 5000 policies in the first year. With rapid growth of 50% in gross premiums written for NC, and 20-30% as growth slows in years after. Those might sound like big growth numbers, but with a low starting policy count this equates to only **4%** of AII's total gross premiums written after 5 years. Successful execution in North Carolina could outperform this estimate.
I increase the expense ratio by 3% (trailing back to a standard 30%) to reflect the additional costs incurred in venturing into a new market. I initially increased the loss ratio by to account for AII 'learning' the new market, but then realised such a small % of premiums written is unlikely to have a bearing on their overall ratio.
This leads to a price target of **$28.13.**
**Thesis Update Potential:** AII releases first quarter results on 12th May, where we may get more guidance on the Carolina Expansion.
# Bonus - Hurricane Forecasts and "Fair" P/B
I revealed in the previous post revealed that the market appeared to be expecting AII to suffer a worse year for hurricane damage in 2026 than in 2025. Whilst that is certainly likely, my previous post revealed that the market seemed to be pricing in too many hurricanes and too much underperformance.
I extended my analysis to include probabilities for hurricanes making landfall, based on the historical hurricane data. Using the losses for each scenario from my previous analysis, I calculated a total 'expected loss' from hurricanes that would normalize AII's earnings for 2025, bringing it closer to 25% RoE.
Insurers such as AII typically trade at a P/B value around 2 (for an RoE only as high as 20%), making a fairer price target **$32** and one likely to get closer to re-rating on more good hurricane news.
**Thesis Update Potential:** More accurate hurricane forecasts release on 21st May.

No Low-Effort Posts - All stock posts must contain at least a basic explanation of the company or some financial information. It doesn't have to be a full DCF or investment thesis, but state what YOU like/dislike about the stock, don’t just ask other people to do research for you.
Simple beginner questions about value investing are welcome. “Low Effort” is at the discretion of the moderators. Short stock questions/recommendations are appropriate as comments in our pinned Weekly Megathread.
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I use DCFs, but probably not in the “textbook perfect” way.
For me, they’re less about getting a precise intrinsic value and more about understanding what assumptions need to be true for a stock to make sense (growth, margins, discount rate, etc.). Even a simple model can be really powerful for that.
I started with a basic template and gradually simplified it — I don’t usually build full 3-statement models unless it’s a very high-conviction idea. Most of the time a revenue + margin + FCF projection with a sensitivity table gets you 80% of the insight.
Pulling data manually from filings works, but it’s time-consuming. I usually combine that with aggregator sites just to speed things up, then sanity check against the filings.
Biggest takeaway: the value of DCF isn’t the output, it’s the thinking process behind it.
Lately I’ve been organizing different scenarios and assumptions more systematically (been using tools like runable for that), which helps avoid anchoring to one “fair value.”

No Low-Effort Posts - All stock posts must contain at least a basic explanation of the company or some financial information. It doesn't have to be a full DCF or investment thesis, but state what YOU like/dislike about the stock, don’t just ask other people to do research for you.
Simple beginner questions about value investing are welcome. “Low Effort” is at the discretion of the moderators. Short stock questions/recommendations are appropriate as comments in our pinned Weekly Megathread.
Consider posting in the [Weekly Megathread](https://www.reddit.com/r/ValueInvesting/?f=flair_name%3A%22Weekly%20Megathread%22)

Hi, this is my 8th grade research project on Qualcomm. *All figures based on FY2025 financials, Q2 FY2026 earnings/transcript, and TTM data. I know, I know "WSB is a casino - put the fries in the bag". But I need someone to rip thesis to shreds if I'm off.*
Qualcomm runs two segments:
* QCT (Qualcomm CDMA Technologies) - the chip division. Designs and sells Snapdragon SoCs for smartphones, automotive, IoT, and increasingly data center. 87% of revenue ($38.4B in FY2025).
* QTL (Qualcomm Technology Licensing) - licenses QCOM's patent portfolio to every manufacturer selling a 3G/4G/5G device on the planet. 13% of revenue ($5.6B) but prints \~72% EBIT margins with minimal capital requirements. It's essentially a toll booth on the global handset market.
# The Setup
QCOM trades at **17x forward earnings** in a semiconductor **peer group with a median closer to 35x**. That discount exists for two reasons:
1. China exposure. Market is worried about tomfoolery around export restrictions and tariffs while China represents \~46% of revenue.
|Region|Revenue FY2025|% Total|YoY|
|:-|:-|:-|:-|
|China|$20.3B|46%|\+14%|
|US|$10.5B|24%|\+9%|
|Korea|$9.5B|22%|\+19%|
2. Apple manufacturing and using its own modem chips for iPhone after using QCOM's since iPhone's release over disputes and lawsuits for the last decade that QCOM charged too much. [Link](https://www.msn.com/en-us/news/technology/after-painful-breakup-qualcomm-tries-to-replace-apple-with-ai/ar-AA22wbBd).
What the market has underpriced is that both headwinds are well-understood, the near-term pain is timing not structure, and two genuine growth vectors - automotive and data center - are accelerating simultaneously.
# Financial History: Recovery From a Brutal Cycle
|FY|Revenue|Net Income|FCF|EPS (GAAP)|
|:-|:-|:-|:-|:-|
|2022|$44.2B|$12.9B|$6.8B|$11.37|
|2023|$35.8B|$7.2B|$9.8B|$6.42|
|2024|$39.0B|$10.1B|$11.2B|$8.97|
|2025|$44.3B|$5.5B\*|$12.8B|$5.01\*|
FY2023 was a post-COVID semiconductor hangover - smartphone demand collapsed, revenue fell 19%. The recovery has been clean: FY2025 revenue matched the FY2022 peak at $44B+, and FCF hit a record $12.8B.
The asterisk on FY2025 earnings is important. Reported net income of $5.5B dramatically understates the business. Operating income was $12.4B - the gap is a $6.1B one-time tax charge in Q4 FY2025 from IRS treatment of capitalized R&D expenses. Q2 FY2026 saw a mirror-image $5.7B non-cash tax benefit for the same reason. Both are excluded from non-GAAP. The operational business runs at roughly $12B annual operating profit and $12.8B FCF. Judge it on those.
# Margins Tell the Real Story
*On a TTM basis:*
|Metric|Value|
|:-|:-|
|Gross Margin|54.8%|
|Operating Margin|25.5%|
|Net Margin (GAAP)|22.3%|
|FCF Margin|18.0%|
|ROE|36.4%|
|ROA|17.4%|
55% gross margins and 36% ROE reflect a business with genuine pricing power - primarily from the licensing business and Snapdragon's dominant position in premium Android.
# The Cheapest Quality Name in Semis
|Metric|QCOM (TTM)|QCOM (Fwd)|Peer Median (Fwd)|
|:-|:-|:-|:-|
|PE|19.8x|17x|\~35x|
|EV/EBITDA|18.6x|\-|\~39x (TTM)|
|P/FCF|24.4x|\-|\~118x (TTM)|
|Div. Yield|1.0%|\-|\~0.3% (TTM)|
The forward PE of 17x uses consensus FY2026 EPS of $10.73 (non-GAAP, adjusted) against $182 share price. For context, NVDA trades at 28x forward on 75% expected revenue growth. ADI at 35x, TXN at 37x, AVGO at 38x - all growing modestly. AMD at 52x. MPWR at 66x
QCOM at 17x is being priced for a structurally impaired business. The data doesn't support that.
# The Two Known Headwinds (And Why They're Bounded)
# 1. Apple Modem Transition
Apple launched the iPhone 16e in early 2025 with its in-house modem, ending QCOM's monopoly on Apple silicon (and launched iPhone Air with new gen C1X modem). The company has a supply agreement through the current year at \~20% share of new iPhones. Beyond that, sell-side models put QCT product revenue from Apple at roughly $2B in FY2027 - down from a higher base but already widely reflected in consensus estimates. The QTL royalty stream (Apple pays to use QCOM's wireless patents regardless of whose modem is in the phone) is a separate negotiation and remains intact at a similar scale pending renegotiation.
The bottom line: the headwind is real, it's roughly $2-3B of QCT revenue at risk, and it's already in the estimate models.
# 2. China / Memory Dynamics
China is 46% of revenue - down from 62% in FY2023 but still the single biggest risk factor. The near-term pain, however, is more nuanced than simple tariff or share-loss fears.
AI data center demand for HBM memory is squeezing memory supply and raising prices. Chinese handset OEMs, facing higher component costs, are deliberately slowing builds and draining channel inventory rather than paying elevated memory prices. QCOM's chip shipments to China are significantly below actual consumer sell-through demand - the phones are still selling, OEMs are just not restocking.
Qualcomm has real-time visibility into this through its QTL licensing data (they see every phone that activates globally). Management during most recent earnings call think Q3 FY2026 as the inventory bottom with sequential growth returning in Q4. So what looks like Chinese demand dwindling very well could be a timing story and not a structural share-loss story.
# What's Actually Growing
# Automotive Is Underappreciated Compounding Machine
|Quarter|Auto Revenue|YoY Growth|
|:-|:-|:-|
|Q2 FY2025|$959M|\+59%|
|Q3 FY2025|$899M|\+68%|
|Q4 FY2025|$961M|\+61%|
|Q1 FY2026|$1.12B|\+61%|
|Q2 FY2026|$1.3B|\+38%|
Annualized run rate crossed $5B in Q2 FY2026 - management guided to exit FY2026 at $6B+. Q3 FY2026 automotive is guided to grow \~50% YoY, an acceleration despite the overall revenue headwinds.
The product transition from cockpit to full digital chassis (cockpit + connectivity + ADAS + autonomy) is what's driving this. Each generation-over-generation upgrade is the largest content-per-vehicle increase in QCOM's history - 3x CPU, 3x GPU, 12x NPU performance in Gen 5 vs Gen 4. BMW ADAS is in production. Bosch and Wave just announced partnerships. The automotive design win pipeline converts to revenue 2-4 years out, which means the orders being won today show up in FY2027-2028 revenue.
At $6B+ and growing 40-50%, automotive is approaching the size of QCOM's entire licensing business.
# IoT Is Getting an AI Tailwind
IoT grew 9% in Q2 FY2026, with industrial and consumer both contributing. The more interesting development: Qualcomm's IQ 10 platform (700 TOPS on-device AI, 18-core CPU) is generating design wins in robotics (Figure AI, Nura), industrial automation, and physical AI applications.
# The New Catalyst Is Data Center
**This is what the market isn't pricing yet**. From the Q2 FY2026 earnings call:
* Custom silicon engagement with a leading hyperscaler, initial shipments December 2026
* Management described it as margin accretive and a multi-generation engagement
* Strategy is both merchant silicon (selling to all comers) and custom ASIC (bespoke chips for specific hyperscalers)
* AlphaWave acquisition adds connectivity IP and custom ASIC execution capability
* Full roadmap reveal at Investor Day, June 24
The thesis is as AI inference scales, the data center disaggregates from monolithic GPU clusters into specialized compute like Google's TPUs or Amazon's Gravitron. Qualcomm's CPU architecture (which already leads on performance/watt in mobile, PC, and auto) translates directly to data center workloads with tight energy requirements. The company has spent years building this quietly. The December shipment is the first public proof point.
None of this is in consensus forward estimates. Analysts are modeling a furthering contracting QCOM (like -10% EPS and revenue growth over the next year). Any credible data center revenue is pure upside.
# Quietly Aggressive Share Buyback
In FY2025, Qualcomm returned $12.6B to shareholders on $12.8B of FCF - essentially all of it:
* $8.8B in buybacks (reducing share count from 1.14B toward \~1.07B)
* $3.8B in dividends (\~1% yield)
Q2 FY2026 alone saw $3.7B returned ($2.8B buybacks + $945M dividends), described as an "acceleration" of the capital return program. The Samsung multi-year deal (>70% Snapdragon share, reaffirmed for this year and next) gives management the revenue visibility to sustain this pace.
# Monte Carlo DCF: Scenario Analysis
*Starting from $12.8B base FCF, 1.072B shares, $195B Market Cap ($182 share price):*
|Scenario|Assumptions|P10 Mkt Cap|Median Mkt Cap|P90 Mkt Cap|P(Undervalued)|
|:-|:-|:-|:-|:-|:-|
|Bear|2% FCF growth, 11% WACC - China structural loss, no data center, Apple gone|$46B|$152B|$430B|40%|
|Base|8% growth, 10% WACC - inventory normalizes, auto grows, data center emerging|$76B|$223B|$565B|56%|
|Bull|15% growth, 9.5% WACC - data center contributes, agentic upgrade cycle, auto $10B+|$113B|$317B|$787B|72%|
|Transformative|22% growth, 9% WACC - platform company across auto + DC + edge AI + 6G|$133B|$455B|$1.29T|81%|
Two things stand out. First, the bear case downside is bounded - even in the worst modeled outcome, the median intrinsic value ($152B) is only 22% below today. A company producing $12.8B in FCF annually doesn't go to zero; the licensing business alone is worth $30-40B in a downside case. Second, the distribution is asymmetric - upside scenarios produce median outcomes 1.6x to 2.3x the current market cap, driven by FCF compounding in automotive and data center.
The bear scenario (40% probability it's undervalued) is the honest admission that risks are real of sustained China tariff escalation, memory-driven demand destruction that outlasts the inventory cycle, or data center execution failure and would all push toward that left tail.
# TL;DR
QCOM is a $195B market cap generating $12.8B in annual FCF - a 6.6% FCF yield - with its two largest headwinds (Apple, China inventory) well-understood, sized, and priced in. The business that remains after those headwinds is growing: automotive at $6B+ and accelerating, IoT expanding into physical AI, and a data center entry that isn't in anyone's model yet. 17x forward earnings against a peer group at 35x, you're being compensated to take on a headline risk that the management says is peaking. The June 24 Investor Day is the catalyst that closes the information gap on the data center opportunity. If QCOM is still trading at a 50% discount to peers in a year, I guess I'm wrong. Price Target $300-400 by end of 2027.
# Positions
$40K in shares @$190 and single 21Aug 220C for investor day
https://preview.redd.it/lawjds8dmjzg1.jpg?width=1206&format=pjpg&auto=webp&s=081f3d01065b98e6b0a54a45a3533fa6a07cf53f

I use Marketgenius my self, quite quick, us stocks, heatmaps etc. They also have some cool calculators eg DCF calculators.

No Low-Effort Posts - All stock posts must contain at least a basic explanation of the company or some financial information. It doesn't have to be a full DCF or investment thesis, but state what YOU like/dislike about the stock, don’t just ask other people to do research for you.
Simple beginner questions about value investing are welcome. “Low Effort” is at the discretion of the moderators. Short stock questions/recommendations are appropriate as comments in our pinned Weekly Megathread.
Consider posting in the [Weekly Megathread](https://www.reddit.com/r/ValueInvesting/?f=flair_name%3A%22Weekly%20Megathread%22)

fair critique, and you're right that a hand built DCF will beat ours on any single name. The trade off is depth versus breadth: we run this every day across 4000+ stocks, so case by case isn't an option. However, we have tried to make it as rigorous as possible.

Growth and margin assumptions both come from analyst consensus, so the projection inherits sell side work rather than my guesses.

WACC is CAPM derived from standardized FMP inputs (risk-free rate, ERP, beta, capital structure).

Capex, working capital, and margin assumptions come from the last fiscal year as a baseline.

Users can override any of these inputs on the platform (growth, WACC, margins, period, terminal value) though we use the default inputs for the value algorithm.

How do you create an algorithm for DCF? It’s very case by case and requires detailed analysis on each input. Or else, garbage in garbage out.

**Accelerant Holdings ($ARX) - Long @$13 per share**
NFA - DYOR
Theme: *"Invest where the puck is going"* \- AI buildout -> undiscovered AI beneficiaries
**TLDR**
\+ >30% rev/ EBITDA growth
\+ AI beneficiary w/ strong data-driven MOAT in small specialty insurance
\+ very likely to beat-and-raise several times over upcoming quarters
\+ <8x fwd EBITDA (v 25x IPO)
\+ 25% mgmt ownership & insider buys
\+ $200m buyback
\+ low float (this cuts both ways, but I think explosive setup with upcoming catalysts)
**Introduction**
Accelerant operates the only two-sided specialty insurance exchange at scale, connecting 280 specialty underwriters with 95 institutional risk capital partners across 22 countries and 600+ products. Exchange Written Premium reached $4.2bn in CY25A, up 35% year-over-year and entirely organic. Revenue was $913m, adjusted EBITDA $237m (+158%), FCF conversion (ex-underwriting) 87%. The stock IPO'd at $21 in July 2025, peaked at $31.18, and trades at \~$13 today, a $2.9bn market cap and a 58% decline from peak. I think the market is applying a carrier multiple to a platform business that is compounding through the cycle and inflecting toward capital-light economics. It fully neglects Accelerant's unique data asset: years of specialty insurance data for small businesses that further compounds in an AI native/ agentic world and already allows Accelerant to vastly outperform the market on underwriting (gross loss ratio >15 ppt below market in low fifties). My probability-weighted 1-year target is $27.09 (+107%), supported by a conservative DCF range of $31-38.
**Dislocation**
The Q3 2025 selloff was triggered by concerns over an affiliated party relationship with Hadron, a fronting carrier backed by Altamont Capital, Accelerant's controlling shareholder. The relationship was disclosed in the S-1, but the market treated it as a governance red flag as it learned that Hadron was the largest third-party insurer on the exchange in Q3 2025. The concern is mostly narrative. Hadron's 5.5% fronting fee is the most expensive of any third-party partner, making it the least favorable relationship for Accelerant in the value chain. Management is actively mixing it down: 47% of third-party premium in Q4 2025, guided below one-third by Q4 2026. The selloff was amplified by a first-time public company management team that failed to communicate the equity story clearly enough for the market to absorb, but has beaten or met guidance every quarter since the IPO.
Underneath the governance noise, consolidated accounting obscures where economic value actually originates. Accelerant reports three segments: Exchange Services (67% EBITDA margin), MGA Operations (45%+), and Underwriting (13%). The Underwriting segment writes roughly 60% of EWP on Accelerant's own paper before ceding approximately 90% to reinsurers. The intercompany eliminations that result compress the visible contribution of the fee platforms on the consolidated income statement, blending what looks like an insurer with what is in reality high-margin, capital-light infrastructure. Stripping out standalone Underwriting EBITDA reveals the hidden growth engine: the fee-based segments accounting for 76% of consolidated EBITDA in CY25A, growing at a roughly 32% CAGR in CY29E forecast. A structural separation would surface that clarity instantly. In the meantime, management has started revamping the narrative. The hire of Linda Huber as CFO is a robust signal: 13 years at Moody's during its run from $30 to $170, then MSCI and FactSet. As third-party premium scales (already 40% in Q4 2025, reaching 50%+ in my forecast by Q2 2027, the convergence of standalone and consolidated accounting will naturally become increasingly clear. Q4 2025 was the first quarter in which Exchange Services contributed positive EBITDA after consolidation eliminations.
Layered on top is sector drag. The quasi-peer basket, mostly brokers, has sold off on AI-disintermediation fears that are legitimate for distribution layers but do not apply to infrastructure. Soft-cycle concerns miss the point that Accelerant's growth is volume-driven: of CY25A's 35% EWP growth, only 3 percentage points came from rate. Further, I believe a softening market counterintuitively benefits Accelerant, because when carriers pull MGA capacity as a first line of defense, the five-year guaranteed capacity becomes disproportionately valuable.
In short, the market is valuing Accelerant as a specialty carrier, not as a platform. Every operating metric speaks against that and management keeps outperforming its own guidance.
**Investment case**
The thesis rests on three pillars. First, a data moat: Accelerant has built the only centralized specialty insurance loss dataset at scale. It cannot be purchased or replicated unless you operate an equivalent exchange for a comparable period. The dataset produces a 51% gross loss ratio, vastly below the roughly 66% industry average. Second, structural lock-in on both sides of the exchange. MGAs stay because the five-year guaranteed capacity bundle is unmatched: 83 NPS, 126% net revenue retention, and only one voluntary departure in platform history. Risk capital partners stay because the curated portfolio delivers returns they cannot assemble bilaterally. Institutional investors accessing through Flywheel Re, Accelerant's collateralized reinsurance sidecar, earn net IRRs exceeding 35% with floors around 20% even under loss ratio deterioration. That is why the partner base has grown from 2 to 95 in six years and third-party premium has surged from 15% to 40% of EWP in a single year. Third, AI acceleration. AI commoditizes distribution and processing, the layers Accelerant does not operate in. It compounds the value of what Accelerant does own: accumulated loss data, committed capital, and regulatory authority across 50 states. Infrastructure becomes more valuable in an agentic world, not less. Accelerant is uniquely positioned to win the "AI agent wars" as it becomes the infrastructure upon which specialty insurance can be autonomously written. Management understands this, but again, fails to communicate the AI beneficiary story digestibly to the market.
**Growth and platform inflection**
These pillars translate into a growth trajectory that is compounding and broadening. EWP has compounded at a 66% CAGR since inception in 2018. The platform added 63 net new members in CY25A, a record, with the pipeline standing at over $4bn of annualized premium, nearly matching the entire current book. Existing risk capital partner capacity alone supports a doubling of EWP from here; growth is not capital-constrained. Four new Mission members launched in Europe and the UK in early 2026, and the oldest member cohort (pre-2020) reaccelerated from 3.9% growth in CY24A to 11.0% in CY25A, confirming the platform effect compounds rather than plateaus. Captive insurance, an entirely new channel, contributed $40m in CY25A with management guiding over $100m in CY26E against a multi-billion-dollar addressable market hinting at the next S-curve Accelerant can capture with a strong right to win.
Two curves define the platform inflection that will force the re-rating. Third-party premium moved from 15% of EWP in CY24A to 30% in CY25A to 40% in Q4 2025 translating into fee income from third-party insurers deploying their own paper through the exchange. The Exchange Services take rate expanded from 6.8% in CY23A to 8.4% in Q4 2025, rising despite platform scaling. This is not a negotiated brokerage commission subject to competitive bidding. It is the take rate on infrastructure with no substitute at scale.
The setup structurally favors repeated beats. The founding team holds roughly $725m of economic interest with options struck at the IPO range of $20-21, none exercised. Management raised both EBITDA and EWP guidance at the Q4 print and has, I believe, deliberately set a (very) conservative bar for CY26, acutely aware of the market's sensitivity post-Hadron. The buyback pace since the March 18 authorization tells a supporting story: roughly $50m deployed in weeks against a $200m program, a signal that near-term prints are expected to beat. At 8.6x, the market is pricing a carrier fully neglecting that this business is quickly becoming the infrastructure upon which specialty insurance is written.
**Valuation**
There is no direct public comparable for Accelerant, but every imperfect one implies a materially higher multiple. The quasi-peer basket (Trisura, Kinsale, Neptune, AJG, BRO, Goosehead, Baldwin, Aon, WTW) trades at 16.0x CY26E EV/EBITDA on average. Kinsale, the most commonly cited specialty comp, trades at 13.9x with weaker fundamentals on every measure and taking full balance sheet risk. Neptune, the only public pure-play MGA, trades at 41.5x, illustrating where the market pays for a platform model. I exclude Ryan Specialty (8.2x, 3.2x net leverage) because roughly half its revenue is large-account E&S wholesale brokerage, the layer most exposed to rate-cycle softening and AI disintermediation. A broader basket of fintech rails, data platforms, financial exchanges, and marketplaces, which I believe should be applicable, trades at 16.9x. On forward Rule of 40, Accelerant scores 57.6% versus 48.6% for quasi-peers and 53.1% for the platform basket. In private markets, well-run MGA platforms transact at high-teens EBITDA multiples. Accelerant itself traded at 20-25x NTM EBITDA for its first month post-IPO. Every reference point lands well above current trading of 8.6x, while the company has a $478m net cash position. 
My base case (60% probability) applies 15x to CY27E EBITDA of $378m, yielding $27.35 (+109%) as a 1-year price target. Downside (20%) at 8x yields $13.57 (+4%). Upside (20%) at 20x yields $39.85 (+204%). Probability-weighted: $27.09 with a very asymmetric RR. DCF corroborates at $31-38.
With $725m of founder equity on the line, $200m buyback at 30% of float, $2m of management open-market purchases at $13 in November 2025, and aligned incentives in the cap table, the story has potential to quickly move from "show me" to pricing the infrastructure for specialty insurance narrative, especially if the company beats-and-raises repeatedly. 
**Risks**
Soft market GLR drift is the primary risk. The 15 percentage point gap to the industry average is the clearest measure of moat durability; mid-50s does not break the thesis, approaching 60% does (read-through from $ASIC's Q1 2026 ER invalidates this concern, also because $ASIC's average written premium is significantly larger than $ARX's). Take rate compression is the second risk: historically it has expanded from 6.8% to 8.4%, I reassess below 7%. Altamont's 79% voting power creates governance overhang, though Fund III's 2034 lifetime means no forced-liquidation timeline. Hadron concentration is being actively mixed down, and its premium fronting fee means the mix-down improves unit economics. Member attrition has no historical precedent: one voluntary departure. Prior-year development was $6.5m in CY25A, down from $15.1m, all from discontinued 2022-vintage books with an LPT backstop.
**Catalysts**
\+ Q1 2026 beat-and-raise (May 13): EWP and EBITDA deliberately conservative for CY26E; EWP, DWP and EBITDA raises all more likely than not
\+ Buyback execution and likely upsize: \~$50m deployed in weeks against $200m authorization
\+ Hadron mix-down below one-third of third-party DWP by Q4 2026, removing the primary bear narrative
\+ Narrative simplification: shift toward fee-based segment reporting, Rule of 40 framing, and revised communication; structural separation of Underwriting segment, exposing fee-based economics currently hidden in consolidation
\+ Altamont Class A/B dissolution by July 2028 at latest, removing dual-class discount

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The definitive question is: is the business still cyclic or at least is the cycle poised to be very long and peak is far away.
The AI buildup, upcoming robotics etc … implies the cycle will last very long. If you believe in this, MU is tremendeous value now. If not, then you are right.
This is something DCF cant show but can give you some quantifications for both scenarios. And also, is the market going to recognise this now or not? If yes, short term we get MU at 2k$. This is the case worth considering

I keep seeing posts here about Micron. If you’re analyzing this stock and think the train has already left, take a look at SK Hynix, which has much more attractive value:
* DCF: 68% undervalued vs. 138% overvalued for Micron
* P/E: 13.5x vs. 29.9x
* Forward P/E: 4.6x vs. 8.2x
* PEG: 0.4x vs. 1.1x
In my view, Hynix still remains deeply undervalued despite its crazy growth in recent months.
I know many will say they can’t buy it, that’s probably one reason it’s still undervalued. However, for European investors there is an option: a GDR listed on the German exchange under the ticker HY9H. I’m not sure whether American investors can buy it.

How do you run a DCF if the future cashflow is so unpredictable. They can end as soon as interest rate goes up. Also, Cyclical stocks, especially semi cyclicals are at peak cycle when they have the lowest forward PE and such, so I’m not sure these can be seen as value.

A month ago, on April 1st, my value algorithm flagged Micron as the top value pick in the S&P 500 and I was like, "are you kidding me?" How can a stock that had run from roughly $50 in 2023 to $338 in April 2026 could be a value stock? I genuinely thought it was a bug.
But then i checked the numbers. They held up
My algorithm scores stocks out of 100 across four dimensions. I've posted about the framework in this community [prevously](https://www.reddit.com/r/ValueInvesting/comments/1ngp8l7/built_a_grahaminspired_value_framework_that/), but here's how MU scored on April 1st at $337.84:

\- Traditional valuation: 16/30. P/E 15.76, P/B 5.25, EV/EBITDA 10.21. Multiples were reasonable but not bargain-bin cheap, which is why this leg lost the most points.
\- DCF margin of safety: 20/20. Fair value $586.77 against price $337.84, 82% margin of safety. Maximum points.
\- Business quality: 35/35. ROE 40.84%, ROIC 27.69%, current ratio 2.90, D/E 0.15, interest coverage 80x, net margin 41.49%. Perfect score across every quality metric the system measures.
\- Growth sustainability: 10/15. Revenue growth 13%, FCF yield 5.8%.
Total: 81/100. Rank 1 in the S&P 500 for April 2026.
What made this counterintuitive was the chart. But underneath it, EPS had gone from -$5.34 in FY2023 to $21.44 on a trailing basis. Earnings were running faster than price. At 16x TTM EPS, Micron was cheaper than it had looked in years, even with the stock up seven-fold from its cycle bottom.
In the 35 days since, MU has moved from $337.84 to $640.20, around +90%.
The lesson: price doesn't determine whether something is a value stock. Earnings do.
Curious how others approach value in cyclical stocks. Not investment advice. DYOR.