PILLAR I · FIRST GATE

Opportunity Screening

The first of ABCD Fund's three investment pillars: the filter that keeps uninvestable situations out of the research queue before analysis begins.

Screening does not decide what to buy. It decides what is worth the cost of finding out — and what should stop here instead.

See the signals ↓ See the outcomes ↓

Why This Gate Exists

Where Temporary Mispricing Becomes an Investable Candidate

Most market stress is noise. Opportunity Screening exists to identify the exceptions: situations where price has moved but the business has not, where forced selling, misread fundamentals, or neglect have created a temporary discount that discipline, not speed, converts into return.

This stage does not make investment decisions. It qualifies candidates for deeper research, or removes them before capital or research time is committed. Every position that enters the portfolio has passed through this gate first.

Where Candidates Come From

Candidate Sources & Signals

Candidates are not discovered the moment stress appears. A universe of names meeting baseline sector and business-quality standards is monitored on an ongoing basis, and reviewed on a regular cadence. A screening event begins when one of the signals below appears against a name already known to that watchlist — not when a headline does.

Price & Liquidity
Price DislocationA measurable, quantifiable gap between current price and estimated intrinsic value, not explained by a change in the business itself.
Sector-Wide CapitulationBroad selloffs affecting sound businesses alongside impaired ones: the most productive source of screening candidates.
Volume & Liquidity StressRedemption-driven exits, margin calls, or forced deleveraging that disconnects price from fundamental value.
Fundamental Signals
Earnings ResetOne-time writedowns or cyclical troughs misread as permanent deterioration in the underlying business.
Balance Sheet PressurePerceived but recoverable debt stress creating an unwarranted discount on a viable enterprise.
Macro & Sentiment
Policy or Regulatory ShockGovernment action, regulatory change, or geopolitical event creating temporary mispricing across a sector.
Sentiment ExtremesShort interest spikes, analyst downgrade clusters, or media fear cycles that overshoot rational valuation.

The Evidence Bar

What Must Be True Before a Candidate Advances

A signal alone does not qualify a candidate. Before a name can leave Opportunity Screening, each of the following must be evidenced, not assumed:

  • Price or Valuation Dislocation

    The gap between price and estimated intrinsic value is measurable, not a hunch.

  • Business or Market Change

    What actually changed is identified: the business, its market, or neither, in the case of indiscriminate selling in a sound company.

  • Catalyst

    A specific, identifiable path back to fair value has been named, not assumed to arrive with time.

  • Recoverability

    The business is financially sound enough to survive the stress period intact.

  • Downside

    The downside scenario is bounded and quantifiable, not open-ended.

  • Liquidity

    The position can be sized, and exited if the thesis fails, within the fund's discipline.

  • Data Availability

    Enough reliable information exists to test the thesis; opacity is treated as a warning, not a discount opportunity.

  • Legal or Structural Concerns

    No unresolved legal, regulatory, or ownership-structure issue would block a clean entry regardless of valuation.

What Happens Next

Three Outcomes, Not Two

Every screened candidate resolves to one of three outcomes. Screening does not force an advance-or-reject decision before the evidence supports one.

Advance

To Deep Discovery Research

Every qualifying factor is evidenced: the dislocation is measurable, the business is recoverable, a catalyst and a bounded downside are documented, and no legal, structural, or data concern blocks a clean entry.

Watchlist

Held for Continued Monitoring

One or more factors is unresolved: a catalyst not yet confirmed, data still incomplete, or a structural question under review. The name remains on the watchlist rather than advancing or being rejected.

Reject

Screened Out

The impairment looks structural rather than temporary, no credible catalyst exists, or a legal or structural concern disqualifies the candidate outright. It is removed before research capacity is spent.

Applied Across Two Mandates

How Screening Applies to Eclipse and Nova

Both of ABCD Fund's intended launch strategies use this same gate. What differs is the role it plays inside each mandate.

Crisis Upside · Concentrated

Eclipse Fund

Opportunity Screening is Eclipse's primary entry filter. Every equity position begins here: a crisis-driven dislocation across global listed equities, screened before Deep Discovery Research is committed to the name.

View Eclipse Fund →

Absolute Return · Diversified

Nova Fund

Nova generates candidates across four strategy sleeves. Screening governs entries into its equity sleeve, applying the same qualifying factors before a name is passed to Deep Discovery Research.

View Nova Fund →

Moving to Deep Discovery Research

Candidates that advance move to Pillar II: Deep Discovery Research, where the business model is tested against the stress scenario that created the entry price.

← Investment Framework

Next Investment Pillar

II · Deep Discovery Research →

Enter Pillar II

Common Questions

Opportunity Screening in Practice

Does ABCD monitor candidates actively, or respond to market events as they emerge?

Candidates are researched before markets price in distress, not discovered after. A watchlist of names meeting the broad sector and business-quality criteria is maintained on an ongoing basis. A screening event is triggered when an identified name reaches a qualifying signal; it is not the first time ABCD encounters the company.

What disqualifies a candidate at screening, even if it appears cheap?

Four conditions lead to disqualification regardless of apparent valuation discount: structural, not temporary, impairment; insufficient reliable data to test the thesis; absence of a credible catalyst within a definable horizon; and an unresolved legal or structural concern. Valuation discount alone does not qualify a candidate.

What happens to a candidate that is neither advanced nor rejected?

It remains on the watchlist. Some names satisfy most, but not all, qualifying factors: the catalyst may still be forming, or supporting data may still be incomplete. Rather than forcing an advance-or-reject call early, the name is held for continued monitoring and revisited as new information arrives.

How many candidates pass from Opportunity Screening to Deep Discovery Research?

Most screened candidates do not progress. The stage is intentionally broad at entry and highly selective at exit. Only names where every qualifying factor is confirmed advance to Pillar II. The pass rate is low by design; it is what makes the research queue investable.

How does Opportunity Screening differ from typical value investing?

The primary distinction is the catalyst requirement. Traditional value investing may accept cheap businesses without a defined recovery mechanism, relying on market re-rating over time. Opportunity Screening requires a specific, identifiable path to recovery: a computable margin of safety and a documented reason the mispricing will close.

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See How Screening Drives Position Selection

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