Front Run Wall Street with AI Powered Earnings Predictions

Thanks for joining us today. We're excited to get started with our latest training. I'm going to share my screen and we're going to jump right in. This is a training focusing on how to front-run Wall Street with AI-powered earnings predictions. This is the real deal. We are truly going to front-run, give you an opportunity to beat Wall Street at its own game. And the takeaway is that we're gonna also give you a playbook, a beat-miss playbook, which stocks are gonna beat and miss. And this is a strategy based on data that has proven to beat the stock market by 9% in the last year. As usual, we've got our disclosures and disclaimers. We are not advisors. We are not investment advisors. We are not tax consultants. We are none of these things. We are publishers of information. We provide better information to empower you and your advisors or your clients to make smarter decisions. So as I mentioned before, I want to hear from you in the chat. First of all, I want to know, how'd you find new constructs? Then let me know, what kind of investor are you? Are you individual, advisor, hedge fund? Go ahead and start submitting some tickers in here. Some of you guys know the drill and you've already started doing that. Look, we're in one of the most exciting times for stock picking. Earnings season, it's here. And the opportunity to position ahead of surprises has never been more critical because given all that's gone on in the past year with tariffs and global unrest, this is a really interesting time for earnings for sure. But, but on top of that, October is historically the most volatile month of the year for stocks. You can see here on this chart that the volatility in October sticks out like a sore thumb, to say the least, compared to all the other months of the year. Here's another interesting stat. US technology stocks now account for a record 56% of total US stock market capitalization. At the same time, defensive stocks make up just 16%, an all-time low. This has never happened before. Check out this chart going back to 1973. You can see the absolute divergence that we're seeing right now between risky and less risky stocks. We are on a risk-on environment for sure. Add to the fact that small-cap junk stocks have beaten quality stocks at dot-com bubble levels. In the last 6 months, the Russell 2000 beat the higher-quality S&P 600 by 6.4%. This is a performance gap that equals that of April 1999. Not a good comp. Not a good comp. In this environment, stock selection isn't optional. It's essential. It's the difference between winners and losers, and that difference is going to be dramatic. And that's why we're here today. We're here to equip you and make you smart about how to understand what's going on in the stock market. Now, I don't mean to scare anybody. So on a brighter note, we just hit a major milestone that proves our methodology, our research and data works. Our Bloomberg New Constructs Core Earnings Leaders Index Just celebrated its one-year anniversary. How many of you guys are already familiar with this? The results after its first year of live active trading up 26%, while the S&P was up 17.5%. That's a 9 percentage point difference. That's huge.

That's huge.

Very impressive outperformance by our fund. Now, here's the thing. Here's the thing that's terrible about the stock market. It's really hard to beat. It's really hard to outperform the market. Terribly hard. Here's a great thing. There's no subjectivity. There's no favoritism. There's no nepotism. There are just the numbers. You can't fake it. Either you beat it or you don't. And when you do, that's a major accomplishment. So congratulations to us. Congratulations to you for finding us and being able to take advantage Putting yourself in a position to take advantage of what is the best research in the world on US stocks, hands down. This outperformance proves that superior, unconflicted fundamental data derived directly from SEC filings beats Wall Street and headline-driven narratives. We beat them. Our robo-analyst AI agent reads what Wall Street ignores— the footnotes, the MD&A, the hidden unusual items. If the one-year anniversary of our Core Earnings Leaders Index outperforming the S&P 500 in a freakishly bullish and overvalued market wasn't enough proof for you, how about this? Our stock picking has beaten 16,000 buy-side professionals to claim the number one spot in multiple categories for 52 straight months. All right, we're almost like— it's over, it's over 4 years. We're going to be like 5 years. It's unbelievable. Again, this is all on SumZero, which is a buy-side-only professional network. This is professional investors that we're beating out here. Very impressive. Here's a picture straight from the site. Number 1 is number 1 spot in consumer discretionary, number 1 spot in industrials. Our work has been vetted and validated by prestigious institutions such as the MIT Sloan School of Business or Sloan School of Management. The Harvard Business School, Ernst Young, and the Journal of Financial Economics. I say this all the time: name another research firm that has been vetted and validated by, by any, by anybody else, not to mention 3 independent, super prestigious institutions whose reputations mean everything to them.

They did it.

Why? Because they know it's true, because they can prove it. Don't forget the fact that we've got other actively traded indices based on our research also proves our value add. Let's take the Very Attractive Stocks Index. It's beat the S&P 500 by 52% over the last 5 years. This is an index based on just the very attractive stocks. Super cool, right? Just take those few stocks that get our best rating and invest in them only and see how they perform. Beat the S&P by 52% over the last 5 years. That's impressive. Then there's the core earnings weighted S&P 500 index. It's beat the S&P 500 by 1% year to date. Very impressive, right? Because this is just taking the same S&P 500, all the same stocks, just weight them based on core earnings as opposed to market cap. That one little tweak gets you more alpha. That's not enough to convince you in the superiority of our data. How about over 5 years? You get 30% more alpha, 30 percentage points of more alpha over the last 5 years just by weighting stocks based on core earnings. So any of you guys like have portfolios already, you want to boost performance, just weight by core earnings. It's a better number, period. And it's proven to be better by the fact that we beat the S&P in the way we did in this core earnings index. This is year to date. We're beating it by 9%. The core earnings leaders index beating it by 9% year to date, 44% over the last 5 years. These are picking stocks based on core earnings, based on the fact that core earnings is a better predictor of future earnings. So when the company's earnings are understated, you go long. When the company's earnings are overstated, You don't get in. But this focuses on all those stocks with the strongest core earnings capture, which is the biggest difference between core earnings and the reported earnings. Anyway, I don't know what to say except core earnings and our research dominates. These indices are managed by Bloomberg and they are not available for the public to purchase. So you can't invest in them, but they are all based on our research, which you can invest in. Now, since we're over a week into earnings season, let's get to the meat of what we're here to talk about. It's time to show you the money. When it comes to making these beat-miss predictions, we do not rely on GAAP earnings numbers. You got to understand, we're doing something that's different and better. That's the only way you beat the market. You got to be different and it's got to be better. It's got to be both. That's, that's why it's so hard to beat the market, because everyone's trying to do that. The first thing you have to understand is that GAAP earnings don't accurately measure profits, largely because companies can manipulate accounting rules to fudge the numbers. This is proven in a variety of studies, and it's not really new news. But we work much harder than that. We could wait because, because we know it's just— it's not enough just to say that GAAP earnings are wrong. We go beyond that to get you info— to get you information that the rest of the market is missing. Don't believe me? It's proven in the Harvard Business School paper. I can get it to you if you need it. Rather than rely on just flawed GAAP earnings or worse, Street earnings, we leverage our RoboAnalyst technology, a best-in-class AI agent for investing. Our agent scours the footnotes, the management discussion analysis, and analysis sections of financial filings to calculate core earnings, a proven superior measure of earnings. And our beat predictions last quarter, we identified 5 stocks most likely to beat earnings. 4 out of 5 of them beat the number exactly as we predicted. The 5th came in line, didn't beat or miss. The beat winners from last quarter: Synchrony Financial, DaVita, Arch Capital Group, and NVR. How we spotted them? We didn't rely on gut feeling or momentum. We identified where Street earnings were systematically understated versus True core earnings. Good question. I'm going to take this one right now because it's a great question from Chris. So yeah, how does it earnings don't matter as much as guidance? The earnings the prediction is on both. You're absolutely right. Like the earnings number, it gets messed with a lot, and I can go on a tangent on that. We do that at the end. But this earnings predictor is for both the actual earnings number and the guidance. Either one counts for us. Like if they either beat. Or they raise guidance, that's a win. And they miss or they lower guidance, that's still correct in our opinion. And I think that's what matters most and that's what we're really good at. So the beat methodology this quarter, just so you know what we're looking at right now going into this 3rd quarter, 61% of S&P 500 companies have GAAP earnings lower than core earnings. Most people are understating. It's hard to believe. The median amount of understatement is 9%. The problem is that Wall Street anchors their forward estimates to flawed historical numbers. So the errors compound. Good question. So, so that is in the financial statements before earnings? No, what we're looking at is in the, the, the bad quality of the financial statements before earnings, the amount of distortion in there. And we find that that also resists, that, that compounds or persists into the Street estimates. That's the problem. Wall Street's not fixing the numbers. And so they're putting those in the estimates, which is why the estimates are off. So why do estimates miss the mark? GAAP earnings are manipulated through accounting loopholes. Street earnings claim to adjust for unusual items, but they don't. Our robo-analyst does the work to get the truth from the footnotes and the MD&A to calculate core earnings, a proven superior measure. Example, DaVita. Let's look at this as a detailed example from our 2Q25 beat report. The trailing 12-month Street earnings for DaVita were understated by $2.50 a share. That's a 23% understatement, a massive signal that consensus was too low. So our robo-analysts found unusual items throughout the filing that Street earnings missed. These included other losses and even gain on changes in ownership interest. When we removed all the non-operating and non-recurring items, core earnings painted a much stronger picture. Remember, when you have access to superior research, you can spot things in stocks that no one else can. Now let's talk about stocks that are most likely to miss. Our missed predictions last quarter, we identified 5 stocks most likely to miss. 2 out of 5 missed earnings exactly as we predicted. The other 3 beat. But here's the key, 4 out of 5 still underperformed the market. Truist Financial Corp., and Caesars Entertainment were the ones that missed. The real alpha was the stock performance, though. Even when a likely miss candidate beats, it often underperforms because that could be the guidance or the fact that people just don't believe the number. 4 out of 5 of our miss picks underperformed the market since publication. This shows the power of identifying fundamental weakness, not just earnings surprises. The missed methodology for this quarter: 38% of S&P 500 companies have GAAP earnings higher than core earnings. The median overstatement is 7%. Again, Wall Street anchors their forward estimates to flawed historical numbers, so the errors compound. So the estimates that you see from Wall Street have these bad— they're based on the bad numbers. They don't pull out the unusual items. They don't do it at all. Sometimes they even make it worse. And why this matters? When Wall Street earnings are overstated, analysts project forward estimates based on inflated historical numbers. The result? Consensus that's structurally too optimistic and ripe for disappointment. Example, Caesars Entertainment. Let's examine their trailing 12-month Street earnings were overstated by $0.50 a share. That's a 46% overstatement, a glaring red flag. Here you can see Street earnings, GAAP earnings, almost exactly the same. Didn't matter. Core earnings, much worse. We see it all the time. Sometimes street earnings are worse than GAAP earnings. They're more far— they're farther off. And so these adjustments that Wall Street are supposed to be making to make things right, they don't happen. Where are these hidden items? All of it in unusual income. The roboanalyst found a $269 million gain on the sale of property, equipment, and businesses. The Street failed to adjust, making earnings look better than true core earnings. Beyond this distortion, the company also had a low return on invested capital. An economic book value per share was negative 53 with a stock price of positive 28, total debt of over— of $26 billion, and an expensive valuation. Weak plus weak fundamentals is a recipe for underperformance. Here's a breakdown of our reconciliation between net income and core earnings. You can see the large majority of the issue here is hidden unusual income. We always reconcile everything back to the accounting. We always show you what we do and how we do it. No one else in the world does that. No one else has the footnotes data classified in the way we do. That's proven in the Harvard Business School paper, and no one else can give you this kind of insight. So what we look for in missed candidates, we want to see negative or falling core earnings, lower declining ROIC, a high price-to-economic book value ratio, which means it's expensive, and weak or negative free cash flow. Do you notice the detail in our research? Finding good picks in a difficult market is not easy. We're showing this detail so you know that we're not just kind of throwing spaghetti at the wall. We're doing real work. I challenge you to name another firm that shows you this much work, including all the big Wall Street firms. Show me someone else that does anywhere close to this kind of work. And we do this work because we know stock picking is hard. We've done it, right? We've got it. We've got the indexes and ETF out there live trading that is beating the market. And we've got a stock track— stock picking track record with some zero versus 16,000 other professionals. We know what it takes because we've done it. And in a market like this where everything seems to just be going up for no apparent reason, sometimes it is entirely possible to pick good stocks, but only if you have the right research. Because the truth is you're being misguided by Wall Street and the media all the time. So many investors are vulnerable right now because they are relying on flawed research. The crucial data needed to get the truth is legally buried in the footnotes of 10-K and 10-Q filings. These things are like 200, 300, 400 pages long, and they're so complex that most professionals ignore them. We're not talking about comic book material. We're not talking about a novel. We're talking about complex legal and financial jargon. Wall Street wants you to ignore them. They want it to be tough. They want you to throw up your hands and say, oh, just, you know what, let me just give it to an advisor. And they'll take care of it because Wall Street's business model depends on you buying stocks. They don't want you to be empowered to figure out what's good and bad. Just trust them so they can keep selling you stuff like Beyond Meat or Peloton or Open, a bunch of these junk stocks that have come out that have now pretty much gone to zero. Their paychecks— you have to understand, their paychecks are tied to investment banking and trading volume, not on providing research. They don't get paid on research. There's a huge conflict of interest, and it's been going on for years. This conflict, though— there's the trick— can also be your biggest opportunity to beat the market. Here's why. Our research enables you to turn Wall Street's cheating ways against them. You see, the thing is, we're uncovering the truth to decode Wall Street's fake numbers so you can beat them at their own game. Here's what I mean. Wall Street analysts have to please their bankers or they get fired. The people providing the estimates out there have to please their bankers or they get fired. Here's an example. A guy I used to work for, a guy I knew well. Got fired from Credit Suisse. Why? Because he said to sell banks when their bankers were positive. How many, how many banks, how many companies for that matter, are going to do business with a Wall Street firm that doesn't have a buy rating on them? That's not kissing their tail. There's a whole great article about how many different reasons there are for buy ratings to be wrong. One of them is called the brown-nosed buy. You're just trying to get in good with the company because guess what? All the money's made in investment banking, not in research. So if you're not helping the investment bankers make money, see ya, you're getting fired. Here it was, he got fired. He was ranked number 2 by Institutional Investors. This was the most prestigious ranking you could get in the business at that time. He was ranked number 2. He's replaced by a lower-ranked team. Guess what? They had more buy ratings. So Wall Street writes favorable, favorable research and makes up numbers to support all those buy and hold ratings. But you do not have to please the bankers. You just need to look out for yourself. You get to use honest research that Wall Street analysts cannot, or they get fired. That's the secret Wall Street is keeping from you. You do not have to rely on them. You can choose to use better research, unbiased, independent research that is proven to outperform. And protecting yourself is more important now than it's been in the last 5 to 10 years. In a market where emotion and momentum are driving prices, you know, these crazy meme stocks, Wall Street research is most dangerous. Wall Street says buy, buy, buy, even while stocks get more and more overvalued. They love it. Hey, it's a melt-up. All the different words for stocks reaching all-time highs. Meanwhile, the rising disconnects between price and value create both disaster risk and extraordinary opportunity, but only for those with the right research. Consider this data point, and I want you to really think about this. 96% of stocks covered by Wall Street are listed as buy or hold. There are the stats. There's the link down at the bottom of the page. We're not making this stuff up. Does it seem statistically possible that 96% of all publicly traded companies are a good investment at any given time, especially when everything is at all-time highs? Or is it that Wall Street research is undermined by the firm's need to generate investment banking and trading revenue? I think it's the latter. Meanwhile, our AI agent, which has no conflicts of interest, no investment banking deals to protect, Rate stocks as follows. Less than 4% earn our very attractive rating, or around 4% earn our very attractive rating. Compared to '96, it's like the opposite. And then less than 13% of our stocks have an attractive rating or better. So when you take into account very attractive and attractive, you're still talking less than 13%. Plus, we found specific stock examples in recent history that were rated as buys and compare them to our rating system. For example, according to Wall Street, New Fortress Energy was mostly a buy or hold this year. According to New Constructs, it was unattractive or neutral. What happened? Down 87% year to date. According to Wall Street, Moderna, buy or hold this year. What's happened? Whoops. We had an unattractive rating throughout the year. What happened? Down 36% year to date. According to Wall Street, Shake Shack was a buy or hold this year. We called it attractive or very unattractive. It's down 27% year to date. I think that wasn't a zombie stock, but that's a longtime danger zone pick. Look at the stats here. Let's just go to the buy ratings and just put the hold ratings to the side. Wall Street buy ratings versus new constructs buy ratings: 57 to 13. 57%, over half of the market. Come on, folks, it's crazy. Given these differences in buy ratings, who do you think is telling the truth? Aside from conflicted interests, another reason for this market's distortion is the reliance on GAAP or Street earnings. As noted earlier, these numbers are subject to accounting tricks that can completely obscure the true operational profitability of a business. You may also be wondering, sure, your stock ratings and new constructs are different from Wall Street, but how do we know they are better? Well, how about 52 straight months as the number one rated stock picker on SumZero? How about Harvard Business School and MIT Sloan professors Joining together to write a seminal paper on how footnotes are missed by the market. No one else has the data. That's what they proved. Ernst Young published a paper proving that our return on invested capital metric, best in the business. Harvard Business School, another set of professors published a paper proving that our ratings outperform. When you look at the true core earnings and valuation of a business, you get the facts behind any stock. This will help you make far better investment decisions with your or your clients' money and can help you uncover hidden opportunities in the stock market, such as Provident Financial Holdings, added to our Most Attractive Stocks model portfolio in January 2024, up 18% in the next month. Crocs, added to the Most Attractive Stocks model portfolio in March 2024, Up 21% over the next month. Dorian LPG added to the most attractive stocks model portfolio in May 2024 increased 18% over the next month. It goes the other way too. Shifts in our rating system to unattractive and very unattractive warn investors for stocks about to fall. How about BGSF added to the most dangerous stocks model portfolio in November 2024? Down 30% in the next month. National CineMedia added to the Most Dangerous Stocks model portfolio in April 2024, declined 24% in the next month. Adtran Holdings added to the Most Dangerous Stocks model portfolio in April 2024, declined 18% in the next month. Now you may be wondering, how do we get our edge in stock picking? Especially during earnings season. That's our robo-analyst AI agent. How do we give you an edge? Better data, models, and ratings. Robo-analyst technology for superior research. Here it is, folks. This is the future. Here's what it looks like when you get a rating on our system. You get 5 categories here. You got quality of earnings and valuation. It's about fundamentals, folks. These are real numbers that can be trusted and audited back to the source. Also proven to generate alpha for the market. You don't get much better than that in terms of fundamental research. Unconflicted, numbers-based, math-based ontology that is proven to generate alpha in the stock market. It's a really impressive thing, even if I do say so myself. This AI has the ability to comb through thousands of financial filings with precision. Analyzing every line and footnote to put— provide ratings like this over the years on over 6,000 stocks. Actively right now, over 3,400 stocks. Are you surprised to know that executives and senior folks from some of the biggest companies in the world have been using this, using this system for years? Goldman Sachs, Morgan Stanley, Merrill Lynch, UBS, Raymond James. Our system makes it simple for you. And this is part of, I think, the real value added to New Constructs. We're doing all this work going through pages that are— we're going through Ks and Qs that are oftentimes as many as 1,000 or 2 pages, 2,000 pages long. Yes, believe it or not, every now and then we get a file that's like 1,000 pages. On average, I think we're talking 200 pages. We do all that work. We classify the— we pull that data, we classify it, we build models, we build a rating system, we have the best ontology in the business. And then we simplify it for you. We break it down. Green means good. Red means bad. Who's going to beat? Who's going to miss? All 5 of the metrics or the elements of the rating system combine to drive the overall rating. Did I mention that we're the only research firm and stock rating system with an official US patent behind us? As our robo-analyst has processed and Processed and structured data from over 200,000 financial filings. We have 20 years of experience optimizing AI for financial statement analysis. This number is well over 200K now. It's going to get a bunch, a bunch higher as we go into filing season here. But we have a secret sauce, an auto parsing, auto collection technology, and more importantly, a proprietary ontology and the ability to understand footnotes and MD&A. Who knows what ontology means? Raise your hand if you know what ontology means. That's kind of a nerdy word. A lot of people are like, what does that mean?

It means—

it's, it's, it's, it means meaning. Ontology is a, is a system for giving meaning to a body of data. So a lot of LLMs and AIs and Groks and Clauds and other firms out there, FinChat, FinTool, They can pull data. Can they tell you what it means? No. Only we have this ontology, and our ontology proven to generate alpha. Here's another interesting, interesting stats— interesting stat. At New Constructs, we've analyzed more than 2 times as many financial statements as Warren Buffett over his entire life and counting. More than 2 times. As much intelligence for going through filings goes into our AI, right? So you can't just repeat Warren Buffett being Warren Buffett. You got to do more than that. And we have meticulously going through all of these filings to generate a system that produces real alpha in the stock market. We're beating the market. Math is simple. We're here, market's here. The difference is 9%. How do we give our machines a Warren Buffett lifetime of knowledge? How do we do that? Our proprietary technology dissects complex financial disclosures into an ontology that delivers superior core earnings and free cash flow. These metrics are proven vital for assessing a company's true financial performance. If you ever read anything about any kind of value investing or took any classes, taking any classes, you want real earnings, you want real free cash flow. These are the numbers that matter most. We do it better than anyone else. It's so much better that we can beat the market. By a wide margin. Most investors and professionals don't have the time to read 200+ page 10-Ks and 10-Qs and do proper diligence. Just why people don't talk about it. It's a dirty little secret. Trust me, I've been in front of a lot of professional investors. They've said things to me like, oh yeah, David, your data is probably better, but I don't really want you to be successful. And I'm okay using bad data as long as everyone else is using bad data. You don't believe me? Check out the Harvard Business School case study on new constructs. There's a quote in there from institutional investors saying that exact same stuff. And it's also really expensive. It's hard to do. It's difficult to do, and it's expensive. The process would cost millions of dollars per quarter for firms to do the proper calculations. That's why nobody else does it. Super expensive. It's just easier to be out there going, buy, buy, buy, buy now. You're going to get fired if you don't say it anyway. So why do the work? Imagine this. You're sitting at your desk, sipping your morning coffee. It's a beautiful fall day, and in less time than it takes to watch a rerun of your favorite TV show or even watch a commercial, you've adjusted your portfolio to weather any market storm. That's what it's like. That's what it's like when you're a client of New Constructs. You're able to immediately identify the hidden gems poised for explosive growth in the current market. And you've sidestepped the landmines that could blow up your portfolio. And the best part? You don't need a PhD in finance or supercomputer in your basement to make it work, because our AI agent technology will do the heavy lifting for you. The comprehensive nature of our research entails countless pages of data and documentation, including information from balance sheets, income statements, Cash flow statements, footnotes, and dozens of other disclosures. Producing and maintaining this level of detailed research would set you back millions of dollars. Now let's get into more detail on how this all works. Stocks make our most attractive list because they have, number one, high-quality earnings based on high returns on invested capital and economic earnings and cash flows. Also, cheap valuations based on free cash flow yields that are positive and high, a price-to-economic book value ratio that is relatively low and low growth appreciation periods. This growth appreciation period is based on a reverse discounted cash flow model, the best one in the business, the best one by far. We've done the work. We've actually given you a reverse DCF analysis as part of our rating that goes into our most attractive stocks list. You want to know how these stocks perform? Here are some recent examples from our current model portfolio. This one from, from the beginning of October. Stock number 1 up 18%. Another stock up 4%. That's like up 2%. Meanwhile, the S&P is down 1%. Proof is in performance, folks. Here's how it's performed versus the S&P since we first started publishing this report. We've been doing this for 20 years. We know what we're doing with this portfolio. We're constantly refreshing and renewing to find the best stocks in the market. In fact, October's update, we added 7 new attractive or very attractive stocks. Now, avoiding the wrong investments is just as important as picking the right ones. And the stocks that make our most dangerous stocks list, they're dangerous because they have misleading earnings, accounting earnings going up, economic earnings going down, low returns on invested capital, and expensive valuations. Bad free cash flow yields, bad price-to-economic book values, and really long market implied growth appreciation periods. The most exhaustive and intelligent analysis of fundamental analysis done across all companies. And what do we do? We identify the best, we identify the worst. Why do you think it outperforms? Because that's an amazing amount of work and research. You want to see how the most recent portfolio has performed? Just from October to just this month, stock number 1 down 16%, another stock down 12%, another stock down 11%. The S&P is down just 1% over that same time. Folks, we're talking about amazing research here, best in the business. Here's how it's outperformed as a short portfolio over time as well. Side note, if you already have Stock Tracker 50 or any of these model portfolios, These things all work perfectly together, uh, especially if you have a Stock Tracker 50. You'll be able to go in and look at this and add those stocks to your portfolio and track them, which I think is a great idea. If you're a Stock Tracker 50 member and you don't have a model portfolio, you are missing out because it's great to be able to look up all those stocks and track them, but when you can actually also infuse Stock Tracker 50 with some of the best stock picks in the market, you need to do that. As I mentioned before, our model portfolios are trusted by some of the most impressive institutions in the world. Top investors in the world have used these exact model portfolios to make investment decisions. Here's what it would cost for you to do it on your own. This is a day-by-day, assuming you're getting $100 an hour and working 8 hours a day, and it takes 8 hours to go through each filing, which at 200 pages on average is pretty good. It takes probably 8 hours to read a 200-page novel. Filings, not so easy. But we're trying to be generous here, right? We don't want to— we don't need to exaggerate how hard it is to do because $2.5 million is a lot. That's what it takes is you have to hire an army of smart people and, you know, you might be lucky to get them for $100 an hour. I just read that ChatGPT is paying bankers $150 an hour to help write models and build prompts. So good luck at 100. And if you want to see like how much some of our people pay us, these are some straight from my bank account, folks, or the New Constructs bank account. It's big numbers for real value data, but we're not asking for that from you. We're not here to soak the public. We're not here to extract value from the public. We're here to deliver value to the public because we can, because our scale means that we can serve people at the high end and serve people at the low end and add equal amounts of value. Because we trust our research and we trust you to come back and buy more after you see how our honesty pays off for you. We make it easy to trust us. We give you pre-screened stocks, both attractive and dangerous, delivered to your inbox every single month. Look, we're at a critical point, inflection point right now in the markets. This is your opportunity to position yourself now Before the next wave of earnings surprises. The investors who prepare now will be the ones who profit and prosper when market sentiment inevitably shifts, or if it doesn't, still do well. Look, our Core Earnings Leaders Index is outperforming in a great market. The positive return streaks like this don't continue forever. When they break, they tend to break hard, and the investors who are not prepared will be the ones who pay. The ones who are prepared can be the ones who benefit. Of course, I can't make the market rational. I can't prevent— I can't prevent corrections or crashes. I can't predict when they're going to happen either. But I can give you the tools to succeed at whatever comes next. I can give you an edge to beat Wall Street at its own game. I can give you the truth about earnings and valuation. Our system doesn't try to time the market. It focuses on finding businesses with strong fundamentals at reasonable valuations, regardless of market conditions. All of our research reflects the latest earnings and filings. This means you're getting the most up-to-date information. We believe our research can serve as your asset to find the winners and avoid the landmines, rather than do the opposite, as described in this Peter Lynch quote: Selling your winners and holding your losers is like cutting the flowers and watering the weeds. Don't do that. And don't just take our word for it either. Here are a few notes from some of our clients. Along with your integrity, we appreciate your commitment to maintaining high standards and your courage for saying so. New Constructs, an American— New Constructs and an American firm in Paris that provides tax services remain at the top of my list of respected companies. I like that. I like that a lot. I like it when clients can see our integrity because You know, that's what matters most in this world. Simply and instantly, you can see how your stocks or funds are rated and where they are trading compared to economic book value. For someone with limited time to spend watching the stock market, this top-down view is incredibly useful. I highly endorse the New Construct system as one must-have tool in any stock or fund selection system. One of my favorites. I look for value in my selections, and I found your analysis superior. Many stock ratings analysis type services are available, but as a business owner, I know how financials can be manipulated to put forward best-case scenarios, thus hiding critical information. Your research digs that out for me and provides a high level of confidence in my selection process. I use other metrics to compare, but I rarely buy something that does not have solid ratings from New Constructs. I maintain all my investments of one of several portfolio listings on your platform. Which allows me to quickly reference the asset if I see something happening. Right now, you notice something? You don't see many people saying things about any product. In fact, trust in the most used institutions has withered across all platforms, whether it's Congress, big business, newspapers, Supreme Court, president. I mean, it's crazy. Who can you trust these days? Not the news.

Not anything.

At New Constructs, we believe in transparency and authenticity, and we only recommend stocks that we believe are truly valuable based on superior data and research, not stocks we are compensated to promote or rate as attractive for a paycheck. Common question number 1: When are these model portfolios released? Most Attractive and Most Dangerous Stocks model portfolios are released the first week of each month. Common question number 3: How many stocks will come with each model portfolio? There's roughly 20 stocks 40 stocks, roughly 40 stocks in both model portfolios. So, you get 20 most attractive large-cap, 20 on the small-cap side. Same with the most dangerous. Try to do 20 on the large-cap and 20 on the small-cap side. So, you got a good smattering across both big-cap and small-cap stocks. Common question number 4, are the stocks guaranteed to have a double or triple-digit gain? No. Nothing we're saying here is guaranteed. I don't have a crystal ball. I don't predict— I don't pretend to predict the future. If you notice in my stock rating in that slide before, it says overall risk-reward rating. Because we're focusing on risk-reward. We're not focusing on trying to have some sort of super prediction. We have better data so we can identify where the market is most off. That's how Most Attractive, Most Dangerous Stocks works. That's how the rating system works. That's the idea. We don't think we can go in and have magical abilities. to pick stocks based on the weather or parking lots or all kinds of technical metrics. No, we understand where earnings are most understated and valuations are cheapest. We understand where earnings are most overstated and valuations are most expensive. And we analyze based on superior data. What if I already have one of the model portfolios? No problem. We can extend your membership. So if you want to buy now to get more, more most attractive, We will deduct whatever you've already paid and give you a refund, or we can just extend the duration. We can add another year to your current portfolio, or however many months you do it at 6 months, 9 months, or 12. What if you have more questions later? Join the masterclass, email us. We do monthly webinars. We do other trainings during earnings season. And guess what? Click on our indices. This is something you can get from Bloomberg. It's a free link on their site. Go see how this works. Proof is in performance, folks. Put up or shut up. 9% year to date, 44% over the last 5 years. Core earnings works, my friends. Core earnings works. All right. Live demonstration time. Let's get the tickers that people wanted to see. Kyle. What do we got here? What's at the top of the list?

First one, we did have 2 that weren't under coverage, so we can look at possibly getting those added. So thank you for those requests. But the first one up will be JEF.

Oh, yeah. Jefferies Financial Group. I know these guys. So not so good. Not great company, not great stock. You know, a lot of times we see green here and red over here. That means good company, bad stock. Yeah, earnings aren't doing so great. Return on capital, so-so. Negative free cash flow yield, not so great. Yep, that's it. That's what it is. You can see how it compares to the S&P. Neutral rating. So, you know, I spent a lot of time talking about the very best and the very worst because that's where the action is. The stuff that's in the middle, meh, right? You know, there's nothing to say you can't make a case for this. I mean, if you wanted to roll out a reverse DCF model, And understand the expectation of the stock price. And if you put in numbers that say, oh, the stock is worth, you know, $80, when you put in your numbers, you put in, you know, hey, whatever the growth is for the, you know, and, and then within 10 years you can generate the cash flow to justify $80 a share. Yeah, great. You can see we just put in a new 10-K for this. Analyst notes, earnings distortion score in line. If you're a pro subscriber, this is what you see. You basically get to see all of it. You get a rating breakdown here in terms of you can see how economic earnings and accounting— look, see, economic earnings down, accounting way worse. That's not good. Return on invested capital, not looking so good either, right? That's what we're seeing here. We can look at NOPAT margins and capital turns broken out, which is super cool. Free cash flow yield, free cash flow yield, and 2-year average free cash flow yield. The actual free cash flow numbers, you can see those. Not so great. Not so great. Free cash flow margin, price to economic book value is a lot cheaper before. A lot cheaper. I'm sorry, a lot more expensive before. Guess what? Came down to this economic book value, didn't it? This is what we're trying to help you avoid in the most dangerous stocks list, right? This is the kind of thing that would be on the most dangerous stocks list where the price to economic book value is so much higher. That's just begging for a correction. All right, Kyle, what's our next one?

Next one up will be Carvana.

Man, this is probably one of the biggest— I just think honestly one of the biggest scams of all time. All this trouble we're seeing in the private credit markets, especially like car loan stuff, dude, we are— this is a ticking time bomb, my friends. Ticking time bomb. The valuation is absolutely absurd. Let's go take a look here. Economic earnings did somehow get positive. Surprised by that. Return on invested capital, making a run. But I think, I think a lot of people who do good, who do deep work on this will say that we're not so sure these numbers are reliable. There's definitely some related party transactions where people that shouldn't be working together are working together, which undermines the credibility of the actual financials themselves.

Yeah. And our latest report on the company, it was all about how they're actually making money from selling loans, not cars. So there's a lot of— it's not the traditional used car dealer you think it is.

Yeah. So yeah, it's all gain-on-sale accounting probably, which means that those, you know, as soon as that— you just can't write them. They're not a bank. They're trying to be a bank. Big. Yeah, big red flag. Free cash flow. What has that been? Certain to certain positive. It's going back down. So I think maybe they peaked here. I believe they've been— insiders have been selling a lot for a while too. Price— I wanted to see this price to economic book value. So the scale isn't great here because you've got such a variation, but you can see price to economic book value getting a little bit better. But we're showing at best the stock, even with the gain on sale accounting, is worth $20 and it's at $337, folks. Big risk here. All right, Kyle, what's our last one?

Last one we'll do is PayPal. PYPL. YPL.

This is a stock that I gotta say, you know, I think it was really expensive for a while, Kyle. It wasn't making any money, but they've turned the corner. Am I thinking— I'm thinking Block, aren't I? PayPal's always—

I think they might have been Block.

Yeah, PayPal's been a great business. It's a great business. Great business. Great business. Do they own Venmo?

I believe so, yes.

Yeah, I mean It's— this is— this is— it's a great business, right? Electronic payments makes it easier. I mean, who hasn't used PayPal? It's excellent. Good company, good stock. I mean, it's getting there. Not a lot of room left. Watch out. You better— if you're going to buy this, you want to probably buy it sooner rather than later. Okay, folks, we are right at an hour. If there are no other questions in the queue here, we're going to call it a day. Thank you very much for being with us. So take advantage of the superior data. We appreciate you being with us, Colin. I appreciate you being with us. We hope you have a great evening. Thanks for all the great feedback. And until next time. Thank you.