Published in full, versioned, and dated. If we change how we value something, the version number changes and the previous version stays available.
This is version 1.2 of our methodology as published on 27 July 2026. It applies to every report whose header names version 1.2. It has been replaced by version 1.3: read the current methodology, which sets out what changed.
Value the business, not the narrative. Every valuation rests on cash a shareholder can eventually claim. Where a company's story and its arithmetic disagree, we publish the arithmetic and let the story argue for itself in the bull case.
Nothing unsigned counts in the base case. Contracted revenue counts. Pipeline, guidance, letters of intent and management ambition do not. They belong in the upside scenario, priced explicitly, so a reader can see how much of a valuation depends on things that have not happened yet.
The capital stack comes before the shareholder. Debt, preferred, accreting project equity and dilution all rank ahead of the common. Any multiple applied to revenue or assets that ignores those claims is measuring the wrong thing.
The model is published, not summarised. Every report carries its working model with the assumptions exposed as controls. A fair value you cannot interrogate is an assertion, not an analysis.
There is no single valuation model that works everywhere, and pretending otherwise is how research goes wrong. We select the framework from the economics of the business, state which one we used in the header of every report, and version it here.
| Business type | Framework | Why |
|---|---|---|
| Contracted asset-backed infrastructureData centres, energy, real assets on long leases | Stabilised NOI, capitalised and de-levered | The asset and the claims ranking ahead of the common are what matter — not the income statement during a build-out. |
| Established cash-generative operators | Unlevered discounted cash flow | Where cash conversion is knowable, model it directly. Multiples hide leverage and reinvestment needs. |
| Cyclicals | Mid-cycle earnings power | Spot earnings at a peak or a trough mislead in both directions. We normalise, and say what we normalised to. |
| Balance-sheet businessesBanks, insurers, lenders | Residual income on book value | Earnings mean little without the equity that produced them and the cost of carrying it. |
| Pre-revenue and optionality | Probability-weighted scenarios | A single point estimate here is false precision. We price the outcomes and show the weights. |
| Anything we cannot underwrite | Not rated | Published as such, with the reason. We do not quietly drop coverage we found difficult. |
Where a company does not disclose an input we need, we derive it from what is disclosed and print the derivation on the page. A derived figure is never presented as a reported one.
The most sensitive input in any model is usually the one the company does not disclose. Every report names its own weakest assumption and makes it adjustable, so a reader can test how much the conclusion depends on it.
Probability weights are explicit judgment calls, labelled as such. They are not derived from any model and should not be read as precise.
Company filings first, then the earnings release and call transcript, then market data. Every figure is traceable to a primary source and the retrieval date is printed on the report.
Every rating is revisited each quarter on results, and immediately on a material contract, a financing event, or a share price move of more than 25%.
Each report states the methodology version it was built under. When the method changes, the version number changes and the previous version stays published.
The charts on Index multiples give a trailing P/E and P/S for six index funds, every trading day: QQQ and SPY from mid-2010, IGV from the start of 2011, SOXX from August 2011, QTUM from March 2020 and DRAM from its launch in April 2026. A seventh, WQTM, is charted on a different measure, for reasons set out below. Nothing in them is taken from a data vendor's screen. The holdings are the ones each fund reports to the SEC, with their filed weights: Form N-PORT every quarter since 2019, and before that the quarterly N-Q and N-CSR schedules for the iShares funds and the shareholder reports of the two trusts, which published no quarterly holdings: QQQ's basket before 2019 is a September snapshot held for a year, SPY's before September 2019 a March or September snapshot held for six months. A fund that holds a share through a total-return swap rather than outright is counted at the swap's notional, which is the exposure, not at the swap's value, which is only its unrealised gain: DRAM keeps two fifths of its assets in swaps on Micron, SK hynix and Samsung against a pile of T-bills, and Micron is its largest position. Between two filings a weight drifts with the share price, and a change the fund makes inside a quarter appears with the next filing, which is published about sixty days after the quarter ends. The earnings and revenue of every constituent come from its own 10-K, 10-Q, 20-F or 6-K, taken on the day the filing was made and never from a later restatement, and summed over the trailing four quarters. Market value is the share price times the company's own filed share count; where that count misleads, it comes from elsewhere in the same filings — Berkshire Hathaway's from the Class A and Class B figures on each report's cover, Visa's from the as-converted total in its equity note, and the weighted average for companies that file their shares issued, treasury stock included, as the basic count.
The ratio is the aggregate form: the market value of every name the fund holds, at that day's weight, divided by the sum of their trailing twelve-month earnings. A loss-making constituent reduces the earnings pool rather than being dropped, so a group carrying heavy loss-makers reads higher here than on a screen that quietly excludes them — software in particular. P/S is built the same way on revenue. The line breaks on any day the covered basket as a whole lost money, because a negative P/E is not a number worth printing.
Quantum computing needs a different yardstick. Its pure plays — IonQ, Quantinuum, Rigetti, D-Wave, Infleqtion, Xanadu and a handful of smaller names — earn nothing, and most sell little: together they are worth tens of billions of dollars against a few hundred million of revenue, much of it one company's. What each of them does have is a research budget and a large pile of cash raised from shareholders. So for WQTM, the WisdomTree Quantum Computing Fund, the chart measures only its pure plays, on EV/R&D: enterprise value (market value, less cash and short- and long-term investments, plus debt) over trailing twelve-month research and development expense, in the same aggregate form as the P/E. EV/sales is shown beside it. Enterprise value rather than market value, because cash is a fifth of these companies' worth today and was half of some of them in 2023. WQTM's own P/E, which nets the pure plays' losses against the earnings of IBM, Microsoft and the chipmakers it also holds, hovers around a zero earnings yield: below zero on almost a third of the days since its launch and anywhere from 115 to 3,900 times on the rest. It says nothing about either group.
The pure plays' figures come from their SEC filings, first-filed and dated by filing, like the rest. Several listed in 2026 by IPO or merger, and their last full year sits in a registration statement (an S-1 or F-1) rather than a 10-K; those years are read from the prospectus. Quantinuum is valued on its Class A and Class B shares together, since the Class B, held by Honeywell and the other pre-listing owners, is exchangeable one for one and carries most of the company. Before WQTM launched in October 2025 the line is pro forma, drawn dashed: the four pure plays then listed, IonQ, Rigetti, D-Wave and Quantum Computing Inc, at equal weight, from April 2023, the first date three of them had a year of results on file. Two cautions. EV/R&D flatters a company that spends more, and Quantinuum's trailing R&D includes $294.9 million of stock compensation booked when its June 2026 listing vested older awards, which holds the reading down until that quarter leaves the trailing year in mid-2027. And the ratio is not comparable across the page: a profitable semiconductor company's R&D is small beside its earnings, so SOXX would read far higher than the quantum pure plays on it without being any dearer. It is a measure of this group against its own past.
Coverage is the share of the fund's weight the reading actually measures. A name is left out on a day when it has no price, no trailing year of results on file, or only one that ended more than eighteen months before. A name that files nothing with the SEC is normally never in; DRAM's Asian memory makers and QTUM's Taiwanese names are the exception, read from the results each publishes at home (SK hynix's newsroom, Samsung's earnings release, Kioxia's Tokyo filing, the Taiwan regulator's quarterly table for Nanya, Winbond, Macronix, Phison, MediaTek, Hon Hai, ASUS, Global Unichip and Alchip, and a mainland data service for GigaDevice), converted to dollars at the period's rate. Where a market reports the year to date, quarters are differenced from the previous release; where it publishes no announcement date, the statutory deadline stands in. The table below is as at 25 September 2026 and is restated whenever this section is.
| Fund | Names held | Weight covered | What is missing |
|---|---|---|---|
| SOXXiShares Semiconductor ETF | 30 | 100% | Nothing of size. Foreign filers on annual reports are held at their last full year until the next one. |
| QQQInvesco QQQ Trust | 102 | 100% | Nothing. |
| SPYSPDR S&P 500 ETF Trust | 503 | 100% | Nothing. |
| IGViShares Expanded Tech-Software Sector ETF | 107 | 100% | Nothing. |
| DRAMRoundhill Memory ETF | 12 | 100% | Nothing. Eight of the twelve names come from home-market sources rather than SEC filings, and two fifths of the fund is held through swaps counted at notional. |
| QTUMDefiance Quantum ETF | 86 | 80% | Fourteen names that file nothing with the SEC, seven Japanese (Tokyo Electron, Renesas, Mitsubishi Electric, NEC, NTT, Fujitsu, Hitachi) and seven European (Airbus, ABB, ASM International, Infineon, Reply, KPN, Orange); and quantum pure plays with too little on file or no machine-readable figures (Quantinuum, Xanadu, Horizon Quantum, BTQ, Quantum eMotion). The fund is near equal weight, so each is about 1%. |
| WQTMQuantum pure plays, 29% of the fund | 11 | 91% | BTQ and Quantum eMotion, Canadian filers reporting in Canadian dollars or without machine-readable figures; Arqit, which does not report R&D on its own line; and Creotech, listed only in Warsaw. IQM, bought since June, joins them with the fund's next filing: its merger filings carry no machine-readable figures yet. |
Earlier years are thinner where a constituent has since been acquired and delisted: no free price feed keeps a delisted name, so those are priced at each quarter's filed value until the next filing, and their earnings are fetched from the filings they made while listed. Filings before 2019 name their holdings without identifiers, so each name is matched to the company's SEC record by hand or by EDGAR's entity search. From 2012 coverage stays above 80% for every fund and above 90% for most years, except QTUM, whose Japanese and European fifth keeps it between 72% and 86%; a series starts on the first day it measures at least 70% of the fund, which is why none begins before mid-2010, when companies were still being phased into machine-readable XBRL filings.
| Term | Definition |
|---|---|
| Undervalued | Modelled fair value is more than 20% above the current price under base-case assumptions. |
| Fairly valued | Modelled fair value is within ±20% of the current price. |
| Overvalued | Modelled fair value is more than 20% below the current price under base-case assumptions. |
| Not rated | We have looked and concluded we cannot underwrite it responsibly. We publish these too. |
We deliberately avoid buy, sell and hold. Those words describe an action a specific person should take, and we do not know anything about any specific person.
A modelled fair value is an estimate, not a fact and not a price target. It is what our assumptions produce, and our assumptions are judgement calls made by people who can be wrong. Every one of them is printed on the report and exposed as a control precisely so that you can replace ours with yours.