Solt DB Invest: User Guide


Solt DB Invest provides more and better information for biotech stocks, so you can make more informed investing decisions. We take a bottom-up approach to stock research that requires us to deeply understand each technology and business in our coverage ecosystem.

The finch communicates its research with three types of content:

  • Research Deep Dives (launching in 2024) aim to provide a thorough overview of each biotech business. It spans the technology platform, pipeline, portfolio, opportunities and advantages, challenges and risks, news flow, and timing. Research Deep Dives are most similar to a static PDF report from other financial services, but is continuously updated and exists on the web. You don't have to download anything.
  • Research Notes provide written coverage of specific events or developments impacting a biotech business. It spans clinical data readouts, new partnerships, "what if?" scenarios for upcoming de-risking events, shifts in the competitive landscape, and so on.
  • The Margin of Safety simplifies our financial models and quantifies our bottom-up research. It's simply the distance between the current stock price and our modeled fair valuation, presented as a percentage.

Solt DB Invest provides a Margin of Safety Dashboard with the attractiveness of all companies in our coverage ecosystem, according to our modeling, and all Research Notes. Each individual company has a landing page with Research Deep Dives, Research Notes, and modeling history for that specific company.


Margin of Safety

The Margin of Safety is the distance between the current stock price and our modeled fair valuation. It's presented as a percentage.

  • When our modeling suggests a company is overvalued, then it will have a negative Margin of Safety. When our modeling suggests a company is undervalued, then it will have a positive Margin of Safety.
  • If a stock price falls, then the Margin of Safety increases. If a stock price rises, then the Margin of Safety decreases.

Allocation Suggestion

Similar to how the Margin of Safety quantifies our research, the Allocation Suggestion quantifies the overall risk level of a biotech stock.

  • Your investing decisions are dynamic. A higher Margin of Safety isn't the only factor to consider.
  • For example, an Anchor stock will generally be less volatile than a Growth (Speculative) stock. As such, Anchor stocks are rarely near the top of the Margin of Safety Dashboard -- but that doesn't mean they don't belong in your portfolio.

Modeled Fair Valuation

Solt DB Invest estimates the fair value of biotech businesses by building and continuously refining risk-adjusted net present value (rNPV) models. The modeled fair valuation is the primary output of each rNPV. This metric allows us to calculate the Margin of Safety, which is how we simplify the modeling process for investors of all backgrounds and experience levels.

  • The modeled fair valuation is communicated in two formats: on a Share Basis ($X per share) and on a Market Cap Basis ($X billion). The former accounts for the modeled fair valuation of each share in a company, while the latter accounts for the modeled fair valuation of the entire company.
  • The modeled fair valuation takes into account our expectations for dilution, which is important in biotech investing.
  • The Current Model Basis is based on a specific fiscal year, point in time for a product pipeline, or combination of the two. Businesses with more certainty can have models based on periods further in the future.
  • For example, the Margin of Safety for Exact Sciences is based on our 2026 model (we communicate models for all annual periods between now and then). Similarly, businesses with more uncertainty can have models based on near-term periods or singular events. For example, the Margin of Safety for Codexis is based on our 2024 model.

Asymmetric Opportunity

Very rarely, a biotech business has the right combination of factors Solt DB Invest wants to bring to your attention. An Asymmetric Opportunity often has a significant Margin of Safety combined with an unusual or overlooked degree of certainty capable of driving inflection points in the share price.

Unlike stock recommendation services that offer multiple "Best Buys" each month, Solt DB Invest has only used the Asymmetric Opportunity label four (4) times since June 2022.

The average Asymmetric Opportunity has delivered a gain of 26.2% and outperformed the S&P 500 by 6.7% as of April 2, 2024.

Portfolio Categories


Most if not all portfolios should have a healthy allocation to steady, profitable, not-much-babysitting-required businesses. Sure, they're boring, but that's kind of the point. Anchors are accompanied by low to moderate overall risk and provide stability through good times and bad.

Anchor positions typically have an allocation range of 0% to 15%.

Growth (Quality)

By definition, most growth companies are speculative, but it's important to draw clear distinctions on a case-by-case basis. A business that's near profitability or generating cash flow should be more resilient in all market environments. A drug developer with higher probability of success assets or a late-stage drug candidate with high odds of approval should earn a durably higher valuation over time.

Although many individual investors believe their favorite growth stock is in this category, very few biotech stocks are Growth (Quality) positions. The Solt DB Invest coverage ecosystem had three Growth (Quality) and eight Growth (Speculative) positions out of 17 total companies at launch in October 2023.

Growth (Quality) positions are often the driving force of your portfolio's returns over your lifetime and can have the highest individual allocation. These are accompanied by moderate to very high overall risk.

Growth (Quality) positions typically have an allocation range of 0% to 15%.

Growth (Speculative)

Most growth stocks are speculative in nature. These businesses are accompanied by significant uncertainty, which can only be mitigated by execution over sufficiently long periods of time, not flashy slide decks and storytelling or one big announcement.

Many early-stage drug developers and unproven synthetic biology companies belong in this category, but can mature into the quality growth category with execution and de-risking. Growth (Speculative) positions are accompanied by high to very high overall risk.

Growth (Speculative) positions typically have an allocation range of 0% to 5%.