Here is the math behind the 4M Confidence Booster.
Tykr also has a patent on the 4M Confidence Booster.
4Ms
- Math – This includes the Summary, Score, and MOS.
- Meaning – This is how a business makes money, and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
Scores
- Math (Max Score = 25)
- Meaning (Max Score = 25)
- Moat (Max Score = 25)
- Management (Max Score = 25)
Maximum Total Score = 100
Here is how the 4M Confidence Booster score is achieved
Math
- Tykr Score (Max Score = 20) – Take the Tykr score and divide by 5. Example: If the Tykr Score is 90, take 90 divided by 5 to get 18.
- Tykr MOS (Max Score = 5) – If MOS is equal to or greater than 50%, apply 5 points. If not, apply 0 points.
Max Score = 25
Meaning
- ChatGPT Prompt (Max Score = 2) – We have a detailed prompt that asks how many revenue streams the company has and how scalable the revenue streams are. Then we ask ChatGPT to rate the scalability between 0 and 2.
- Net Profit Margin (Max Score = 2) – If Net Profit Margin is equal to or greater than 20%, apply 2 points. If not, apply 0 points.
- ROIC (Max Score = 2) – If ROIC is equal to or greater than 10%, apply 2 points. If not, apply 0 points.
- ROA (Max Score = 2) – If ROA is equal to or greater than 20%, apply 2 points. If not, apply 0 points.
- ROE (Max Score = 2) – If ROE is equal to or greater than 15%, apply 2 points. If not, apply 0 points.
- If Alpha has outperformed the market, apply 10 points. If underperformed the market, apply 5 points.
- What is your understanding of the business? Very High = 5 points, High = 4 points, Medium = 3 points, Low = 2 points, Very Low = 1 point.
Note: Net Profit Margin, ROIC, ROA, and ROE are great representations of the scalability and profitability of a company.
Max Score = 25
Moat
- Summary (Max Score = 5) – 1st place = 5 points, 2nd place = 4 points, 3rd place = 3 points, 4th place = 2 points, 5th place = 1 point.
- Score (Max Score = 5) – 1st place = 5 points, 2nd place = 4 points, 3rd place = 3 points, 4th place = 2 points, 5th place = 1 point.
- MOS (Max Score = 5) – 1st place = 5 points, 2nd place = 4 points, 3rd place = 3 points, 4th place = 2 points, 5th place = 1 point.
- Revenue Scalability (Max Score = 5) – 1st place = 5 points, 2nd place = 4 points, 3rd place = 3 points, 4th place = 2 points, 5th place = 1 point.
- Alpha (Max Score = 5) – 1st place = 5 points, 2nd place = 4 points, 3rd place = 3 points, 4th place = 2 points, 5th place = 1 point.
Max Score = 25
Management
- Free 5 points – We give every company 5 points minimum because building a company and taking a company public is an incredible achievement!
- ChatGPT Prompt (Max Score = 2.5) – We have a detailed prompt that asks how management has impacted the company. Then we ask ChatGPT to rate the impact between 0 and 2.5.
- ROIC (Max Score = 2.5) – If ROIC is equal to or greater than 10%, apply 2.5 points. If not, apply 0 points.
- ROA (Max Score = 2.5) – If ROA is equal to or greater than 20%, apply 2.5 points. If not, apply 0 points.
- ROE (Max Score = 2.5) – If ROE is equal to or greater than 15%, apply 2.5 points. If not, apply 0 points.
- Glassdoor Company Score (Max Score = 5) – This rating in Glassdoor is between 0 and 5. We take the actual score and round up or down to the nearest round number.
- Glassdoor CEO Approval (Max Score = 5) – This rating in Glassdoor is between 0 and 100%. We take the score and divide by 20.
Note: ROIC, ROA, and ROE are great representations of management’s impact on a company.
Max Score = 25
Maximum Total Score = 100
If you want to Buy and Sell stocks with confidence, we welcome you to join Tykr for free!