Investment Methodology
How I score, rate, and evaluate investment opportunities
What is a Conviction Score?
The conviction score is a composite 0-100 signal measuring the strength of the risk-adjusted return case over a 12-month investment horizon. It is not a probability of success, nor a target return. It is the overall quality and completeness of the investment case, as I judge it.
The score synthesises three input dimensions:
The Three Pillars
Fundamentals
- Revenue and earnings trajectory
- Competitive position and moat
- Balance sheet quality
- Management quality and capital allocation
- Cash generation and margin structure
Catalysts
- Proximity of upcoming events
- Magnitude of potential re-rating
- Binary versus gradual outcomes
- Regulatory or clinical milestones
- Partnership or M&A potential
Sentiment
- An AI-derived sentiment score from news and social media analysis
- Analyst consensus and price targets
- Price momentum and positioning
- Insider activity signals
- Sector and macro tailwinds
Recommendation Tiers
Each report carries two labels: a conviction score (0-100) and a recommendation tier. The tiers translate the raw score into qualitative guidance about the strength of the investment case, accounting for stock type and risk profile.
| Score | Recommendation | Conviction | Description |
|---|---|---|---|
| 80 to 100 | CONVICTION BUY | Highest conviction | Exceptional case. Multiple clear catalysts, strong fundamentals, sentiment turning positive. The strongest opportunities in coverage. |
| 65 to 79 | BUY | Strong | Strong case. Fundamentals are sound, at least one meaningful near-term catalyst in play. A core holding where the case holds together. |
| 50 to 64 | OPPORTUNISTIC BUY | Conditional | Valid case with unresolved risks. Catalysts are either distant or binary. A specific trigger is required to upgrade the view. |
| 30 to 49 | SPECULATIVE BUY | Speculative | A specific binary catalyst is required to justify the position. Typically clinical-stage biotech, pre-revenue tech, or turnaround situations where the bull case is low-probability but high-impact. |
| 0 to 29 | AVOID | Negative | The investment thesis is broken, the risk or reward profile is genuinely negative, or the company faces an existential challenge without a credible recovery path. |
I do not publish position sizing advice. The conviction tier describes the strength of the investment case, not what to do with your own money. Position sizing is a personal decision that depends on your circumstances, risk tolerance, and existing portfolio.
In Practice
Recent examples from published reports
These examples are drawn from the most recent published reports and update automatically. They illustrate how the scoring framework reads in practice, not what to buy or sell.
How the Score is Calculated
Each report uses a bull, base, and bear scenario framework. I assign a probability to each scenario and a score reflecting the outcome. The weighted sum of those three scenarios produces a raw conviction figure, which is normalised to the 0-100 scale. The final score also incorporates the AI sentiment dimension as a market-read adjustment.
Sentiment is one input among three, not a definitive signal on its own. A very low sentiment reading against strong fundamentals can indicate market fear rather than fundamental deterioration, and the score is adjusted accordingly.
Important Caveats
- Not financial advice: All research is for informational purposes only. DYOR HQ research does not constitute financial advice. Always conduct your own due diligence.
- Past performance: Historical conviction scores and recommendations do not predict future outcomes. Markets are forward-looking and conditions change.
- Binary events: Clinical-stage biotech, early-stage tech, and turnaround situations carry binary risk that no scoring framework fully captures.
- Sentiment limitations: AI-powered sentiment analysis reflects current market mood, not fundamental value. During market dislocations, sentiment can detach from fundamentals for extended periods.
- Currency: All prices and market cap figures use the native currency of the primary exchange. GBX (pence) stocks are denoted with a .L ticker suffix. USD stocks use the plain ticker.
Disclosures
Author
DYOR HQ is a personal research project. The site is operated under the named pseudonym DYOR HQ. Contact: hello@dyorhq.ai.
Personal Interests
I hold positions in some of the securities covered on this site. Where I do, I aim to be transparent about it. A report's position-status should be read as a personal position disclosure, not a recommendation that you take the same view. Always do your own research and consider your own circumstances.
Publication Date
Each report carries a publication date. Conviction scores and recommendations reflect my view at the time of publication and may be revised as conditions change. The site also displays a "last updated" date on this methodology page and on each report.
Not Independent Investment Research
DYOR HQ is not a regulated entity. The research published on this site is not independent investment research within the meaning of MiFID II (Directive 2014/65/EU) or the Commission Delegated Regulation (EU) 2016/958. Recommendations are the personal views of the author and are published for informational and educational purposes only. They do not constitute a personal recommendation, an investment advice service, or an offer or solicitation to buy or sell any security.
This site does not, and is not intended to, fall within the scope of the Market Abuse Regulation (EU 596/2014) safe harbour for recommendations produced by independent research providers. Nothing on this site should be read as meeting the disclosure, governance, or independence standards required of a regulated research publication.
Disclaimer: DYOR HQ research is provided for informational and educational purposes only. It does not constitute financial, investment, legal, or tax advice. All analysis reflects the views of the author at the time of publication and is subject to change without notice. Investment markets involve risk. Past performance is not indicative of future results. Always consult a qualified financial adviser before making investment decisions. All data is sourced from live market feeds and company disclosures. DYOR HQ makes no warranty as to the accuracy or completeness of any data cited.