Investing Terms Used in the AlphaLens Frameworks

A 10-K is a company's official annual report filed with the SEC; a 10-Q is the equivalent quarterly report. Both contain more complete, carefully worded disclosures — including risk factors and footnotes — than a company's press releases or earnings calls typically include.

Used in: Full Company Breakdown

A quarterly report that large institutional investors — mutual funds, hedge funds, pension funds — are required to file with the SEC, disclosing their U.S. stock holdings. It's the primary public record of what "smart money" owns.

Used in: Insider Activity Analyzer

An employer-sponsored retirement account that lets employees contribute pre-tax income, often with a matching contribution from the employer, with taxes deferred until withdrawal.

The highest and lowest prices a stock has traded at over the past year, commonly used as a reference point for valuation and momentum.

An investment strategy where an investor buys a meaningful stake in a company and pushes for changes in strategy, management, or capital allocation to unlock value.

A measure of an investment's performance relative to a benchmark index, representing returns generated beyond what market risk alone would predict.

How an investor divides a portfolio across asset classes like stocks, bonds, and cash, based on goals, time horizon, and risk tolerance.

A financial statement showing what a company owns (assets), owes (liabilities), and the resulting equity at a single point in time.

A unit of measure equal to one hundredth of one percent (0.01%), commonly used to describe changes in interest rates or fees.

The most serious, realistic case for why a stock could perform poorly — built with the same effort and rigor as the bull case, not treated as an afterthought.

Used in: Bull vs Bear + Moat Analysis

A sustained decline of 20% or more in a broad market index, typically accompanied by widespread pessimism and falling economic activity.

The study of how psychological biases — like overconfidence, loss aversion, and herd behavior — cause investors to make irrational decisions.

A measure of a stock's volatility relative to the overall market; a beta above 1 means more volatile than the market, below 1 means less.

The gap between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask), reflecting a stock's liquidity.

Shares of a large, well-established, financially sound company with a long history of reliable performance.

A company's total assets minus total liabilities, representing the accounting value of shareholders' equity.

The strongest realistic case for why a stock's price could rise, based on the most plausible positive version of the company's future — not the most optimistic one imaginable.

Used in: Bull vs Bear + Moat Analysis

A sustained rise in stock prices, typically 20% or more from a recent low, often accompanied by investor optimism and economic growth.

How a company's management deploys its cash — through acquisitions, share buybacks, dividends, debt paydown, or reinvestment in the business — and whether those decisions have historically created or destroyed shareholder value.

Used in: Management Quality Scorecard

The profit realized when an investment is sold for more than its original purchase price.

The tax owed on capital gains, with the rate typically depending on how long the investment was held before selling.

A financial statement tracking the actual cash moving in and out of a company through operating, investing, and financing activities.

A specific event or development — near-term or long-term — that could cause a company's revenue or earnings growth to accelerate, such as a new product launch, market expansion, or industry tailwind.

Used in: Catalyst Calendar

Interest earned on both the original investment and on previously accumulated interest, causing returns to accelerate over time.

A corporate bond that can be converted into a predetermined number of shares of the issuing company's stock, combining fixed income with equity upside.

The degree of confidence large professional investors appear to have in a stock, inferred from whether they are adding to or reducing their position over time.

Used in: Insider Activity Analyzer

The original purchase price of an investment, used to calculate capital gains or losses when it's sold.

An assessment of a company's or government's ability to repay debt, assigned by agencies like Moody's or S&P, which affects borrowing costs.

The practice of buying and selling securities within the same trading day, aiming to profit from short-term price movements.

A measure of financial leverage comparing total liabilities to shareholder equity, indicating how much a company relies on debt versus its own capital.

Spreading investments across different assets, sectors, or geographies to reduce the impact of any single investment performing poorly.

A portion of a company's earnings paid out to shareholders, typically on a quarterly basis, as cash or additional shares.

A company that has increased its dividend payout every year for at least 25 consecutive years, signaling long-term financial stability.

How comfortably a company's earnings or free cash flow can support its current dividend payments, even if results temporarily decline.

Used in: Management Quality Scorecard

The percentage of a company's earnings or free cash flow that it pays out to shareholders as dividends, rather than reinvesting in the business. A very high payout ratio can signal a dividend is at risk.

Used in: Management Quality Scorecard

A stock's annual dividend payment expressed as a percentage of its current share price.

Investing a fixed amount of money at regular intervals regardless of price, which reduces the impact of volatility over time.

Whether a company's reported profits are backed by real cash generation, or instead inflated by aggressive accounting choices, unusual items, or large accruals.

Used in: Earnings Quality Analyzer

Earnings before interest, taxes, depreciation, and amortization — a measure of operating profitability that strips out financing and accounting decisions.

The theory that stock prices fully reflect all available information, making it difficult to consistently outperform the market through stock picking.

A measure of a company's total value, calculated as market capitalization plus debt minus cash, used to compare companies with different capital structures.

An investment approach that considers environmental, social, and governance factors alongside financial returns.

An exchange-traded fund — a basket of securities that trades on an exchange like a stock, often tracking an index at a low cost.

The date on or after which a buyer of a stock is no longer entitled to that period's upcoming dividend payment.

The annual percentage of a fund's assets charged to cover management and operating costs, deducted automatically from returns.

The central bank of the United States, responsible for setting monetary policy, including interest rates, that influences borrowing costs and market conditions.

A person or firm legally obligated to act in a client's best financial interest, rather than their own.

Building a structured representation of a company's financial performance, typically in a spreadsheet, to forecast future results and value the business.

The cash a company generates from its operations after subtracting capital expenditures — the money actually available for dividends, buybacks, debt paydown, or reinvestment.

Used in: Earnings Quality Analyzer, Management Quality Scorecard

Evaluating a company's intrinsic value by examining its financial statements, business model, competitive position, and economic environment.

An agreement to buy or sell an asset at a predetermined price on a specific future date, commonly used to hedge risk or speculate on price movements.

An intangible asset on a company's balance sheet representing the premium paid in an acquisition above the fair value of the acquired company's net assets.

The percentage of revenue remaining after subtracting the cost of goods sold, reflecting how efficiently a company produces its products.

A stock expected to grow revenue and earnings faster than the overall market, typically trading at a premium valuation and reinvesting profits rather than paying dividends.

A pooled investment fund that uses varied, often aggressive strategies — including leverage, derivatives, and short selling — to generate returns for accredited investors.

A fund designed to passively track the performance of a specific market index, like the S&P 500, rather than trying to beat it through active management.

A general rise in prices over time that erodes purchasing power, influencing interest rates, corporate costs, and stock valuations.

Buying or selling a stock based on material, non-public information; illegal when done in violation of a fiduciary duty, but legal when properly disclosed.

The portion of a company's shares held by large professional investors — mutual funds, pension funds, hedge funds — rather than individual retail investors.

Used in: Insider Activity Analyzer

A measure of how many times over a company's earnings can cover its interest payments on debt — a key gauge of financial safety margin.

Used in: Earnings Quality Analyzer

The risk that changes in interest rates will negatively affect the value of an investment, particularly bonds and rate-sensitive stocks.

What a company is actually worth based on its underlying business fundamentals — cash flows, growth, and risk — independent of what its stock price happens to be today.

Used in: Fair Value Stress Test

A specific piece of evidence or event that, if it occurred, would prove an investment thesis wrong. Naming invalidators up front makes a thesis testable rather than just hopeful.

Used in: Long-Term Investment Thesis

A clear, concise statement of why a stock is or isn't worth owning, built from the evidence gathered across a full research process — not just a collection of notes.

Used in: Long-Term Investment Thesis

An initial public offering — the first time a private company sells shares to the public, listing on a stock exchange.

The use of borrowed money or financial instruments to increase potential investment returns, which also magnifies potential losses.

An acquisition of a company financed largely with borrowed money, using the target company's own assets and cash flow as collateral.

An order to buy or sell a stock only at a specified price or better, prioritizing price control over guaranteed execution.

How quickly and easily an asset can be bought or sold in the market without significantly affecting its price.

A broker's demand for an investor to deposit additional funds or securities after a margin account's value falls below the required maintenance level.

The cushion between what a stock is actually worth and what an investor pays for it — a buffer that protects against mistakes, bad luck, or risks that weren't obvious at the time of purchase.

Used in: Fair Value Stress Test

The total value of a company's outstanding shares, calculated by multiplying share price by shares outstanding.

A short-term decline of 10% or more in a stock or index from its recent high, generally considered a normal part of market cycles.

An order to buy or sell a stock immediately at the best available current price, prioritizing speed of execution over price certainty.

A section of a company's SEC filing where management explains recent results and discusses risks in their own words — often more candid than a press release, since it carries legal disclosure obligations.

Used in: Full Company Breakdown

A durable competitive advantage — based on brand strength, cost structure, switching costs, network effects, or similar factors — that protects a company's profits from competitors over time.

Used in: Bull vs Bear + Moat Analysis, Competitor Moat Comparison

A professionally managed investment pool that combines money from many investors to buy a diversified portfolio of stocks, bonds, or other securities.

The per-share value of a fund, calculated by dividing total assets minus liabilities by the number of outstanding shares.

A company's total profit after subtracting all expenses, taxes, and costs from revenue — often called the 'bottom line.'

The degree to which a company's costs are fixed versus variable, which determines how much profits swing with changes in revenue.

Buying and selling contracts that give the right to buy or sell a stock at a set price, used for speculation, income, or hedging.

The price-to-earnings ratio — a stock's price divided by its earnings per share, used to gauge how expensive a stock is relative to its profits.

An investment strategy that aims to match market returns by tracking an index, rather than trying to outperform it through active stock selection.

The set of comparable companies used to benchmark a stock's valuation, growth rate, margins, and returns on capital — chosen for business similarity, not just sector membership.

Used in: Competitor Moat Comparison

A low-priced, small-cap stock, typically trading under $5 per share, often associated with higher volatility and less regulatory oversight.

The risk of losing money in an investment with no realistic prospect of recovery — as distinct from ordinary short-term price volatility, which can reverse.

Used in: Portfolio Risk & Fit

Periodically adjusting a portfolio's holdings back to target allocations as market movements cause them to drift.

Deciding what percentage of a total portfolio a single stock should represent, based on conviction, risk tolerance, and fit with existing holdings.

A valuation metric comparing a company's stock price to its revenue per share, useful for valuing companies with little or no earnings.

A risk that the market already appears to account for in a stock's current price, as opposed to an underappreciated risk that could still cause a surprise.

Used in: Portfolio Risk & Fit

A company's ability to raise prices without losing a meaningful number of customers, indicating competitive advantage and revenue durability.

Investment in private companies not listed on public exchanges, typically involving significant ownership stakes and active management influence.

A document filed with the SEC that provides shareholders with information needed to vote on company matters, including executive pay and board elections.

A monetary policy where a central bank purchases securities to inject money into the economy, lowering interest rates and encouraging lending.

A significant decline in economic activity lasting more than a few months, typically marked by falling GDP, rising unemployment, and reduced spending.

A real estate investment trust — a company that owns or finances income-producing real estate and is required to distribute most of its taxable income as dividends.

Judging whether a stock is cheap or expensive by comparing its valuation metrics — multiples, growth, margins — to those of its closest peers, rather than looking at it in isolation.

Used in: Competitor Moat Comparison

A measure of how efficiently a company generates profit from shareholders' equity, often used alongside other signals to judge management's capital allocation skill.

Used in: Management Quality Scorecard, Earnings Quality Analyzer

The total amount of money a company generates from its core business activities before any expenses are deducted.

The accounting rules governing when and how a company records revenue on its books — rules that can sometimes be applied aggressively to make earnings look stronger than the underlying business.

Used in: Earnings Quality Analyzer

An investor's capacity and willingness to endure fluctuations in the value of their investments in pursuit of returns.

An automated, algorithm-driven investment platform that builds and manages a portfolio based on an investor's goals and risk tolerance, typically at lower cost than a human advisor.

Return on investment — a measure of profitability calculated as the gain from an investment divided by its cost.

An individual retirement account funded with after-tax dollars, where qualified withdrawals in retirement are completely tax-free.

A sale of additional shares by a company or major shareholders after the IPO, which can dilute existing shareholders if new shares are issued.

Shifting investment allocations between different industry sectors based on the current stage of the economic cycle.

Borrowing and selling a stock with the intent to buy it back later at a lower price, profiting from a decline in the stock's value.

A rapid price increase that forces short sellers to buy shares to cover their positions, further accelerating the price rise.

An investment opportunity arising from a specific corporate event — like a merger, spin-off, or restructuring — rather than normal business performance.

When a company separates part of its business into a new, independently traded company, distributing shares to existing shareholders.

When a company repurchases its own shares from the market, reducing shares outstanding and often boosting earnings per share.

A reduction in existing shareholders' ownership percentage that occurs when a company issues new shares.

A period when asset prices rise well beyond their underlying fundamental value, typically driven by speculation, before a sharp correction.

A basket of stocks designed to track the performance of a specific market or sector, such as the S&P 500.

A contract giving the holder the right, but not the obligation, to buy or sell a stock at a set price within a specific time frame.

A tool that filters stocks based on specific criteria like valuation, growth, or financial metrics to help narrow down investment candidates.

When a company increases its number of outstanding shares by issuing more shares to current shareholders, lowering the price per share without changing total value.

An order that automatically triggers a sale once a stock falls to a specified price, designed to limit an investor's losses.

The fundamental economic forces that determine stock prices — when demand for shares exceeds supply, prices rise, and vice versa.

Price levels where a stock has historically found buying interest (support) or selling pressure (resistance) — reference points traders watch, though they can break in either direction.

Used in: Options Flow Analyzer

The total revenue opportunity available to a company if it captured 100% of its target market — a ceiling used to judge how much room a growth story realistically has to run.

Used in: Catalyst Calendar

A mutual fund that automatically adjusts its asset allocation to become more conservative as a specified target date, often retirement, approaches.

Selling investments at a loss to offset capital gains taxes, while reinvesting the proceeds to maintain market exposure.

Evaluating securities by analyzing statistical trends from trading activity, such as price movement and volume, rather than a company's fundamentals.

The unique combination of letters used to identify a publicly traded stock on an exchange, such as AAPL for Apple.

An individual retirement account funded with pre-tax or tax-deductible contributions, where withdrawals in retirement are taxed as ordinary income.

A company experiencing financial or operational struggles that shows signs of recovering, offering potential upside if the turnaround succeeds.

A stock that appears cheap based on traditional valuation metrics but continues to underperform due to deteriorating fundamentals.

The degree to which a stock's price fluctuates over time, commonly used as a measure of investment risk.

An IRS rule disallowing a tax loss deduction if a substantially identical security is repurchased within 30 days before or after the sale.

A company's current assets minus current liabilities, measuring its short-term liquidity and ability to fund day-to-day operations.

A graph plotting interest rates of bonds with different maturities, whose shape (normal, flat, or inverted) is often used as an economic indicator.