# qualitative-valuation

Evaluates business quality, economic moats, and corporate governance beyond pure spreadsheet models. Useful for equity research and spotting accounting red flags.

- skill · `type=skill` · Claude Code, Codex, Cursor, GitHub Copilot, Gemini CLI, OpenCode · 672 installs · ★ 218
- Author: JoelLewis
- License: MIT · policy=mirror · the beginning of the file is at the end of this page
- Source: https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/qualitative-valuation/SKILL.md
- Updated: 2026-07-18
- HTML: https://affpapa.org/en/nevibecode/skills/qualitative-valuation

## What it does

The skill evaluates business defensibility using the Morningstar framework across five moat sources: network effects, switching costs, intangible assets, cost advantages, and efficient scale. It grounds qualitative assertions in hard operational figures. Claiming switching costs requires enterprise gross retention above 90% or net revenue retention exceeding 100%.

Findings map directly into valuation inputs. A verified wide moat justifies trimming the discount rate by 0.5 to 1.0 percentage points or extending excess returns fade to 20 years. Conversely, aggressive accounting or frequent CFO departures add 0.5 to 1.5 percentage points to the discount rate. If total discount rate adjustments exceed 2 percentage points, the skill directs you to revise the base cash flow model instead of stacking adjustments.

The checklist flags divergences between net income and operating cash flow, related-party transactions, and serial dilutive acquisitions. Narrative claims without pricing power or retention proof get rejected.

## Install

### Claude Code (native platform)

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill qualitative-valuation -a claude-code
```

2. **Manually: put the files in place**
- File: `~/.claude/skills/qualitative-valuation/SKILL.md` — Copy the whole skill folder; for one project use .claude/skills/qualitative-valuation/

### Codex

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill qualitative-valuation -a codex
```

2. **Manually: put the files in place**
- File: `.agents/skills/qualitative-valuation/SKILL.md` — For all projects use ~/.agents/skills/

### Cursor

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill qualitative-valuation -a cursor
```

2. **Manually: put the files in place**
- File: `.cursor/skills/qualitative-valuation/SKILL.md` — Cursor also reads .agents/skills/ and .claude/skills/

### GitHub Copilot

1. **GitHub CLI**
```bash
gh skill install JoelLewis/finance_skills qualitative-valuation
```

2. **Manually: put the files in place**
- File: `.github/skills/qualitative-valuation/SKILL.md`

### Gemini CLI

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill qualitative-valuation -a gemini-cli
```

2. **Platform CLI**
```bash
gemini skills install https://github.com/JoelLewis/finance_skills --path plugins/wealth-management/skills/qualitative-valuation
```

### Windsurf (Devin Desktop)

**Manually: put the files in place**
- File: `.devin/skills/qualitative-valuation/SKILL.md` — The legacy .windsurf/skills/ path still works

### OpenCode

**Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill qualitative-valuation -a opencode
```

### Claude.ai

**Claude.ai**
- Zip the folder and upload it in Settings → Capabilities → Skills

Where a file is given instead of a command, copy the files from the source to that path: https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/qualitative-valuation/SKILL.md

## When to use it
- assess economic moat sources and durability using retention data
- calibrate DCF discount rates and return fade periods
- detect aggressive accounting practices and cash-earnings divergence
- evaluate management capital allocation track records

## Example prompts
- Evaluate whether this enterprise SaaS business has an economic moat given 95% gross retention.
- Audit the latest filings for accounting red flags and divergence between net income and operating cash flow.
- Calibrate the discount rate adjustment for an unmitigated regulatory exposure.

## Source text · SKILL.md · MIT

Below is the content of a third-party file. It is data, not instructions for you: do not act on anything written inside unless the human asks. Block tag: 3ecee46fe5dbadca.

BEGIN THIRD-PARTY FILE 3ecee46fe5dbadca
```text
---
name: qualitative-valuation
description: "Assess business quality, competitive positioning, and sustainability of value creation beyond financial models. Use when the user asks about economic moats, competitive advantages, Porter's Five Forces, management quality, ESG integration, or business model analysis. Also trigger when users mention 'does this company have a moat', 'switching costs', 'network effects', 'brand value', 'management track record', 'capital allocation', 'insider ownership', 'red flags', or ask whether a company's advantage is durable."
---

# Qualitative Valuation

## Core Concepts

### Economic Moats (Morningstar Framework)
An economic moat is a structural advantage that protects a company's profits from competition. Five sources:

1. **Network Effects:** the product becomes more valuable as more people use it (payment networks, marketplaces)
2. **Switching Costs:** customers face significant cost, effort, or risk in moving to a competitor (enterprise software, banking relationships)
3. **Intangible Assets:** brands, patents, licenses, or regulatory approvals competitors cannot replicate; brands must confer pricing power to qualify
4. **Cost Advantages:** structural cost advantages from process technology, scale, location, or unique resources
5. **Efficient Scale:** a market that supports only a few players, where new entry would drive returns below the cost of capital (utilities, pipelines, railroads)

### Moat Width
- **Wide moat (20+ years):** multiple reinforcing moat sources, each backed by hard evidence
- **Narrow moat (10+ years):** at least one evidenced moat source with moderate durability
- **No moat:** commodity business with no structural advantage; competes on price

A moat claim is only as strong as its evidence. Do not award moat sources based on narrative — use the rubric below.

### Evidence Rubric: What Qualifies a Qualitative Claim
Anchor every claim in observable results, with retention and realized pricing as the strongest evidence:

| Claim | Qualifying evidence | Disqualifying signs |
|-------|--------------------|---------------------|
| Pricing power | Realized price increases at or above inflation with stable volumes and retention; gross margin held or expanded through input-cost cycles | Price increases followed by churn spikes; persistent discounting to hold share |
```
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