What breaks a deep value thesis

A cheap stock stops being a good investment when the reason it was cheap turns out to be correct. This site keeps a written risk list on every covered company. The 75 companies carry 409 documented risks, between 3 and 10 per company with a median of 5. 180 of them are rated high or critical. The pattern in the counts is the useful part.

The most frequent risks across the universe

Category labels are the ones the research notes use. Near-duplicates are merged by lower-casing the label. A risk can appear in more than one company.

What the counts say

Market and macro risk appears 46 times, more than any other category. That is the honest answer to the question: most deep value theses do not break because the accounts were fraudulent. They break because the discount was a correct forecast of a cycle, a rate path or a demand shift that the buyer treated as temporary. Regulatory risk follows at 45. That covers licence renewals, tariffs, price controls and litigation, and it is the category that most often turns a cheap price into a value trap without any change in reported earnings.

Financial and debt risk appears 40 times and is named by 52 companies. Governance risk appears 35 times and is named by 44 companies. Both matter more than their position in the table suggests, because they remove the two ways a value investor gets paid: the company survives long enough to re-rate, and the cash reaches the shareholder.

The risk that is under-counted

Earnings quality and accounting risks look small in the table: 17 risks, about 4 percent of the total. 20 companies name one, and only 10 of those rate it high or critical. That count is low because most companies pass a filing check when they enter the universe. It is not low because accounting risk is rare. It is low because this screen removes the companies that fail the check, so the survivors start clean. A thesis can still break later, when a restatement, a receivable write-down or a change of auditor arrives after the page was written.

Regulatory and legal risk is named by 39 companies. Read that figure as the widest single exposure in the universe, because one court date or one licence decision can remove the discount or double it. The methodology page explains how each risk is scored and why a missing number is shown as awaiting reconciliation rather than estimated.

Four tests before you trust a discount

1. Name the reason for the discount. Write one sentence that explains why the shares are cheap. If you cannot, the discount is not a thesis, it is an observation. Every company page carries a thesis line that states the reason in the company's own numbers.
2. Check whether the reason is permanent. A cyclical low, a lost contract and a lawsuit all look the same in a price chart. Only one of them is usually fixable. The risk list separates market and macro risk from operational and execution risk for this reason.
3. Find the trigger. A thesis needs a dated event that closes the gap: a refinancing, a divestment, a margin recovery, a buyback. The catalysts section on each company page lists them with dates. A discount with no trigger can stay open for years.
4. Decide what would prove you wrong. Write the number and the date in advance. If the thesis breaks, you want to notice it from the filing rather than from the price. The F-Score screen is one early warning: a falling score on a name you own is a reason to re-read the filings.