My Process for Deep-Dive Reports

Identifying Potential Multibaggers

My deep-dive reports serve as a specialized extension of the Alpha Engineer ranking system—designed specifically for reporting on high-conviction opportunities with extraordinary return potential. While my weekly ranking provides a systematic framework for portfolio management, these in-depth analyses focus on identifying rare opportunities with asymmetric upside within that quantitative foundation.

Although immediate multibagger manifestation would be ideal of course, I structure my analysis around a two-year horizon. This timeframe provides sufficient runway for catalysts to materialize and fundamental improvements to translate into share price appreciation.

The Statistical Foundation

The Alpha Engineer ranking establishes a statistical baseline for the deep-dive reports. Analysis of 400 top-50 ranked stocks held for two years during the last 16 years reveals important performance characteristics:

• Average 2-year return: 32% (15% annualized)

• Positive return frequency: 62% of stocks

• Multibagger frequency: 15% delivered returns exceeding 100%

• Exceptional performers: 2% generated returns exceeding 300%

• Downside risk profile: 9% experienced declines exceeding 50%

These metrics aren't merely descriptive—they establish clear probability thresholds that potential multibagger candidates must significantly exceed to warrant special attention.

The Multibagger Identification Framework

To qualify for a deep-dive report, a stock must project significantly better outcomes over two years than the baseline:

• Projected average return 80%* or better (versus 30% baseline)

• Probability of positive returns 70% or better (versus 62% baseline)

• Probability of 100%+ returns 30% or better (versus 15% baseline)

*This approximately equals the historical result of The Alpha Engineer model portfolio (36.4%). It makes no sense to focus on stocks that are projected to under-perform the model.

Analytical Methodology

Quantitative Assessment

Despite a stock's favorable ranking, I conduct targeted financial analysis to identify specific dynamics not fully captured by the quantitative model. I leverage multiple specialized financial research platforms and check third-party analyses when available.

Qualitative Evaluation

The qualitative assessment examines internal and external factors through a SWOT framework. For this work, I check reports, online sources and use AI deep research.

• Strengths: Competitive advantages, management quality, operational excellence

• Weaknesses: Financial vulnerabilities, execution challenges, structural limitations

• Opportunities: Industry tailwinds, expansion vectors, strategic catalysts

• Threats: Competitive pressures, regulatory dynamics, technological disruption

Scenario Development

This analytical foundation enables the construction of three distinct scenarios:

• Bear Case: Dominated by identified weaknesses and threats

• Base Case: Aligned with consensus expectations and steady-state industry growth

• Bull Case: Leveraging core strengths to capitalize on identified opportunities

For each deep-dive candidate, I create return projections based on different scenarios. I give each scenario (bear, base, and bull case) a probability of occurring. This allows me to compute the numbers needed to identify a potential multibagger.

Integration with Portfolio Strategy

For me, these analyses complement rather than replace The Alpha Engineer methodology. I incorporate multibagger candidates within my own portfolio based on The Alpha Engineer process and may establish a higher allocation for these high-conviction opportunities. I still use a minimum ranking as my trigger for selling these stock—not an arbitrary holding period—maintaining disciplined exit criteria even for my highest conviction positions.

It’s important to notice that due diligence is critical when targeted stock picking is part of the process. Selecting stocks only based on personal preferences may introduce behavioral biases that diminish returns of the quant model instead of increasing them.

Publication Cadence

True multibagger opportunities remain relatively rare—even within a refined universe of top-ranked stocks. With my framework I try to capture approximately one compelling candidate per month on average. However, I may also publish analyses of "near-miss" candidates that exhibit promising characteristics but fall short of full qualification, or those that present compelling opportunities under specific scenarios. This allows subscribers to use my report and conduct further due diligence.

Remember: While these deep-dive reports provide substantial analytical groundwork, they should serve as a starting point for your own research journey, not a destination.

The Alpha Engineer --- Investing with a quantitative edge

Disclaimer: The Alpha Engineer shares insights from sources I believe are reliable, but I can't guarantee their accuracy---data's only as good as its inputs! This content (whether on Substack, via email newsletters, X, or elsewhere) is for informational and educational purposes only---it's not personalized investment advice. I'm not a registered investment advisor, just an engineer crunching numbers for alpha. My opinions are my own and may shift without notice. Investing involves risks, including the chance of losing money. Past performance, whether from back-testing or historical data, does not guarantee future results---outcomes can vary. So, please consult your financial advisor to see if any strategy fits your situation. Full disclosure: I may own positions in the securities I mention, as I actively manage my own portfolio based on these strategies.