I spent the summer on FICO reading every deep dive and sell side research. Here's where I think they all go wrong

AI Summary

{"summary": "The author argues FICO's widely-cited 'five-layer moat' is really a single coordination standard, and that its stock decline despite ~40% earnings growth is a duration write-down rather than an earnings problem, leaving him modestly bullish at $985.", "reason": "The author provides a specific directional thesis (modestly bullish) based on a fundamental disagreement with the market's valuation of FICO's earnings duration.", "ideas": [{"symbol": "FICO", "direction": "long", "thesis": "The author contends existing sell-side and independent research double-counts FICO's moat by awarding it five separate moat sources when it is really one coordination standard, which he says changes the correct valuation approach. His main variant view is that FICO is not an earnings story: earnings rose ~40% while the stock halved, implying the market is writing down the duration of FICO's premium returns, as it has done before. He is modestly bullish at $985, with the stated risk being that the market continues to compress the duration of those excess returns.", "thesis_short": "FICO is a duration write-down, not an earnings story", "quote": "So fico isn't an earnings story, it's a duration write down, basically market is writing down the duration of fico earning premium returns like it has in the past (which is my main variant view and thesis driver)", "confidence": 0.7, "sentiment": 0.5, "timeframe": "unspecified"}], "model": "gemini-3.1-flash-lite", "failure_count": 0, "verified": true, "extraction_model": "deepseek-flash"}

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I spent the summer on FICO reading every deep dive and sell side research. Here's where I think they all go wrong

I've tracked FICO closely since the spring and read essentially everything published on it this year: the sell side, the independent deep dives, the long form substack write ups (fun fact: I even came across one that was 112 pages long lol). Most of them get the facts straight and right but the method usually isn't, and there's gap which is why I wrote my own, besides the fact i promised some folks I'll share my fico analysis (looking at you u/raytoei)

where I think the existing research goes wrong:

1. Counting one moat five times: The standard treatment is morningstar checklist and awarding FICO a brand moat, switching costs, a cost advantage, network effects, and regulatory intangibles, then concluding that the moat is five layers deep. Well it isn't. It's one thing: a coordination standard... i've explained in much depth later
2. The comp set choice which I disagree with
3. Almost nobody separates level from duration: FICO's earnings went *up* \~40% while the stock halved despite qoq raising guidance etc. So fico isn't an earnings story, it's a duration write down, basically market is writing down the duration of fico earning premium returns like it has in the past (which is my main variant view and thesis driver)

My take - modestly bullish @$985.

The piece is \~7500 words, which is why it's on substack rather than pasted here and I think it's earned length not unnecessary fluff but at times i've expalained the theory of frameworks I used if theory bores you, the article tells you which section to skip to and treats Part I as a glossary

\*On AI, since someone will ask -\*yes, I used it. i work in PE now, was in fundamental long/short before that, and I don't have 40 spare hours to draft and redraft. however, I don't outsource the thinking... you won't find the points I made in most other published pieces on fico, which is the whole reason the piece exists, why else would I repeat if it's already stated. If ai made differentiated views cheap the sell side notes I read this summer would have contained some

Happy to have a healthy debate on any of it in the comments

[https://sharmakshit.substack.com/p/fico-one-wall-not-five?r=2upvyp&utm\_campaign=post&utm\_medium=web](https://sharmakshit.substack.com/p/fico-one-wall-not-five?r=2upvyp&utm_campaign=post&utm_medium=web)

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