What is dilution-aware valuation?

Dilution-aware valuation accounts for the impact of stock-based compensation (SBC) on shareholder value. Traditional models ignore SBC dilution, but Michael Burry's approach adjusts the valuation formula to reflect the true cost of equity dilution from stock grants and options.

What is Owner's Earnings?

Owner's Earnings is a cash flow metric that represents the true earnings available to shareholders. It's calculated as: Net Income + GAAP SBC (add back non-cash) - Actual Stock Buybacks - RSU Tax Withholding Payments. This shows the real cash cost of stock-based compensation.

How is this different from a regular DCF calculator?

Unlike traditional DCF calculators that use GAAP earnings or free cash flow, BurryDCF uses Owner's Earnings which properly accounts for stock-based compensation costs. It also applies a dilution adjustment to the Gordon Growth Model formula to reflect ongoing shareholder dilution.

Where does the data come from?

BurryDCF pulls data directly from SEC EDGAR XBRL filings (10-K and 10-Q reports) for Owner's Earnings components, and uses Polygon.io for real-time stock prices, dividends, and company information. All data sources are transparent and verifiable.

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Valuation Insights

Educational notes on dilution-aware investing and Michael Burry's valuation methodology

New to valuation?

We recommend reading these articles in order. Start with CAPM Explained to understand discount rates, then move on to Owner's Earnings and finally the complete DCF guide.

1CAPM2Owner's Earnings3Burry DCF

Discount Rate

8 min read

CAPM Explained: Understanding Discount Rates

Learn how the Capital Asset Pricing Model calculates the required rate of return for stock valuation. The foundation for understanding discount rates.

Read Article

Cash Flow

10 min read

Owner's Earnings: The True Cash Flow

Discover Michael Burry's methodology for calculating true cash flow. Learn why Wall Street's earnings are misleading and how to find the real numbers.

Read Article

Valuation

12 min read

Burry's Dilution-Aware DCF Guide

The complete guide to dilution-aware valuation. Learn how to adjust the Gordon Growth Model for stock-based compensation and calculate true fair value.

Read Article

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