Why We Built IVCO: An AI-Powered Value Investing System

If you've ever spent a Saturday night arguing with a spreadsheet about free cash flow adjustments, welcome to the club.

I've lived there.

Most serious value investors have.

You start with a simple question: What is this business really worth? Then the rabbit hole opens: adjusted earnings, maintenance capex, one-off gains, cyclicality, management quality, moat durability, discount rates, terminal assumptions, scenario analysis.

By the time you're done, your coffee is cold, your assumptions are everywhere, and your "intrinsic value" has enough precision to impress a machine and enough fragility to fool a human.

That tension is exactly why we built IVCO.

IVCO stands for Intrinsic Value Confidence Observatory. It was born from old-school value investing discipline, sharpened by modern tools, and designed for one purpose: help investors think better, decide clearer, and act with conviction.

This is the story of how it happened.

The Problem with Traditional Value Investing Workflows

Let me start with a confession.

For years, we did what good value investors are supposed to do: read filings line by line, track business quality over time, normalize earnings, build valuation models, and test assumptions from every angle.

It worked.

But it was slow. Very slow.

And the deeper your process gets, the more bottlenecks appear.

You don't just need financial statements. You need context for every abnormal quarter, every accounting quirk, every capex cycle, every management decision that changes future cash flows.

In theory, spreadsheets solve this.

In practice, spreadsheets become little museums of your past assumptions.

Version 7 says one thing, version 11 says another, and version 14 has a circular reference that somehow still returns a number.

Worse, manual work encourages hidden inconsistency.

You may apply one conservative adjustment to Company A and forget the same treatment for Company B. You may model growth in detail for one favorite holding and use lazy shortcuts for another.

That's not a character flaw. It's a bandwidth problem.

The market is noisy, time is finite, and disciplined repetition is hard when your process lives in a maze of tabs and formulas.

We wanted to keep the thinking and remove the friction.

The Value Investor Behind IVCO

IVCO was created by a value investor with decades of field experience.

He didn't come at this from software first. He came at it from investing first.

That matters.

Because a lot of "investment tools" are engineered to produce pretty dashboards, not better decisions. The founder cared about something different: building a system that reflects how a real value investor actually thinks, under uncertainty, with imperfect information.

Over years of study and field-tested investing, he developed a framework rooted in four masters:

• Benjamin Graham: margin of safety as non-negotiable discipline

• Warren Buffett: owner earnings over accounting theater

• Philip Fisher: qualitative depth, long runway, and business character

• Charlie Munger: mental models, inversion, and multidisciplinary sanity checks

Different eras, different styles, one shared pursuit: buy partial ownership in understandable businesses at sensible prices, then let time do its work.

IVCO is the operational expression of that philosophy.

A Real-World Spark: The King Slide Case Study

Every robust system has a moment when theory meets reality.

For IVCO, one of those moments was the founder's analysis of King Slide.

The company offered what value investors love and fear in equal measure: strong business qualities with valuation complexity.

On the surface, reported numbers looked attractive. Underneath, there were questions that demanded adjustment and judgment.

What portion of earnings reflected durable economics versus temporary effects? How should one normalize cash generation through cycles? How do you weigh qualitative strengths against forward risks?

The founder applied his framework manually.

He adjusted for non-recurring items, recalibrated operating reality, modeled multi-stage cash flow growth, and overlaid qualitative confidence based on moat, management, and industry dynamics.

The exercise was powerful.

It also exposed a blunt truth: doing this carefully for one company is possible. Doing it consistently across many companies is punishing.

King Slide didn't just validate the framework. It revealed the scalability problem.

That was a turning point.

Building a Scalable Value Investing System

IVCO didn't emerge fully formed. First came handwritten notes. Then spreadsheets. Then templates. Then versioned frameworks with rules, coefficients, and scenario logic.

Each step improved rigor. Each step also increased complexity. At some point, the spreadsheet stopped being a tool and started becoming a maintenance project.

The idea became clear: preserve the investor's judgment while automating the repetitive mechanics. Not "replace" analysis. Not "predict" stock prices. Build an intelligent observer that processes and structures information at scale, so the investor can focus on judgment, skepticism, and conviction.

That became IVCO.

How IVCO Applies Graham, Buffett, Fisher, and Munger

Plenty of products quote Buffett and Munger.

Fewer encode their logic in a repeatable process.

IVCO was built to do exactly that.

Graham: Margin of Safety as Design Constraint

Graham taught us to respect uncertainty, not deny it.

So IVCO does not chase false precision. It emphasizes conservative assumptions, scenario thinking, and valuation ranges that leave room for error.

Margin of safety is not a slogan in IVCO. It is a structural rule.

Buffett: Owner Earnings First

Accounting earnings are useful. Owner earnings are what owners actually own.

Buffett made this distinction explicit in his 1986 letter, and it remains one of the most practical ideas in investing.

IVCO starts there.

Instead of anchoring on reported EPS, IVCO prioritizes cash economics and sustainable owner-level earning power. That keeps the model tied to business reality rather than accounting optics.

Fisher: Qualitative Strength Matters

A good spreadsheet can rank numbers. It cannot fully capture business character.

Fisher's lens reminds us that long-term returns depend on more than current multiples: product strength, customer dependency, innovation culture, management integrity, and reinvestment runway all matter.

IVCO integrates this through structured qualitative assessment, so "quality" is not hand-wavy but still recognizably human.

Munger: Mental Models and Inversion

Munger taught investors to avoid stupidity before chasing brilliance.

Inversion, opportunity cost, incentives, second-order effects, and base rates all belong in serious valuation work.

IVCO reflects this by forcing risk articulation and confidence calibration, not just bullish projection. It asks: What could break this thesis? What assumptions are fragile? What are we missing?

That discipline prevents elegant models from becoming expensive mistakes.

The Core IVCO Valuation Framework: 6 Principles

Here's how it works in practice.

IVCO's valuation engine follows six principles.

1) Owner Earnings Over Accounting Earnings

Reported net income can be distorted by accounting choices, timing effects, and non-cash noise.

IVCO estimates owner earnings to focus on distributable economic value after maintaining the business.

2) Reality Coefficient

Historical earnings are rarely clean.

One-off gains, unusual losses, temporary subsidies, and cyclic spikes can mislead if taken at face value.

IVCO applies a Reality Coefficient to adjust historical performance toward normalized economics.

Think of it as a translation layer from "reported" to "repeatable."

3) Three-Stage DCF

Single-growth DCF models are convenient and usually unrealistic.

IVCO uses a three-stage DCF structure:

• Years 1-5: higher growth phase

• Years 6-10: moderation phase

• Perpetuity: steady-state phase

This mirrors how real businesses mature and reduces the distortion of one-size assumptions.

4) Confidence Coefficient

Not all cash flows deserve equal trust.

A business with durable moat, rational capital allocation, aligned management, and favorable industry structure deserves more confidence than one with fragile economics.

IVCO expresses this via a Confidence Coefficient: a qualitative multiplier informed by moat quality, management reliability, and key risks.

5) Intrinsic Value Range, Not a Single Point

If someone gives you one intrinsic value number to two decimals, they are either overconfident or selling software.

IVCO outputs an intrinsic value range.

That range acknowledges uncertainty and supports better position sizing, entry discipline, and patience.

6) Wonderful Companies at Fair Prices

This philosophy keeps us out of two traps:

• overpaying for quality

• buying cheap businesses that stay cheap for good reasons

IVCO is built for the middle path: durable businesses, sensible prices, and asymmetric long-term outcomes.

Why AI and Value Investing Are a Natural Fit

The obvious question deserves a direct answer.

Value investing is judgment-heavy, contextual, and often contrarian. AI is computational, pattern-driven, and often associated with speed.

Why combine them? Because they are complementary.

AI is exceptionally good at processing large volumes of data quickly, standardizing calculations, surfacing anomalies, and maintaining consistency across companies and time.

Humans are still better at assessing management credibility, understanding strategic nuance, distinguishing temporary pain from structural decline, and deciding when to act with conviction under uncertainty.

AI handles computation and data. Humans handle judgment and conviction.

We are not building a black box that tells you what to buy. We are building an intelligent co-pilot that strengthens your process and protects your discipline.

If a calculator can save you six hours of manual normalization, use it. Then spend those six hours where edge actually lives: thinking independently.

What IVCO Is Not

IVCO is not a signal generator, not a momentum screener, not a guarantee engine, and not a substitute for your own judgment.

Markets stay irrational longer than your patience. Models fail in ways you didn't imagine.

IVCO improves process quality. Process quality improves decision quality. Decision quality improves long-term odds. That's the chain.

How IVCO Differs from Other Investment Tools

Value investors have options: Morningstar for ratings, Simply Wall St for visualizations, GuruFocus for screening. Each serves a purpose.

IVCO takes a different approach. Rather than scoring stocks with proprietary algorithms or presenting data dashboards, IVCO encodes a specific valuation methodology - the Allen Framework - into a repeatable, auditable process. Every assumption is documented. Every coefficient is traceable. The output is a conviction range, not a buy/sell signal.

The distinction matters: most tools tell you what to think. IVCO helps you think better - then lets you decide.

Lessons From Building IVCO

Three lessons worth sharing.

First, rigor is easier to admire than to sustain. Systems matter because discipline decays under pressure.

Second, qualitative judgment must be structured, not ignored. If it matters, it deserves a place in the model.

Third, humility is not optional. Every assumption is a claim about an uncertain future. Range thinking and margin of safety aren't conservative aesthetics — they're survival tools.

And maybe a fourth: if your model never surprises you, you're probably fitting the past.

Where We're Going

IVCO started with one investor's framework and one hard-earned problem: doing serious value work consistently without drowning in process overhead.

It's becoming a platform for investors who want discipline without rigidity, speed without shortcuts, and AI without surrendering judgment.

The future of value investing is not human versus machine. It's human with machine. Machine for scale and consistency. Human for interpretation and courage. That partnership is where real edge compounds.

Final Word

We built IVCO because value investing deserves better tools. Not louder tools. Better tools.

Tools that respect first principles, preserve investor agency, and help you think clearly when the market is euphoric, terrified, or simply distracting.

If you've ever wrestled a spreadsheet into submission at midnight and still wondered whether your assumptions were coherent — welcome. We're just getting started.