MAVI — Market-Adjusted Value Index
A composite index that folds earnings yield, float availability, and market depth into a single comparable score.
The core insight: a stock's true value-per-price-dollar isn't just about P/E. A company with a P/E of 10 where only 5% of shares trade is fundamentally different from a P/E of 10 where 95% of shares are on the open market. The float ratio captures insider lockup, illiquidity risk, and true price discovery. The log-scaled depth factor prevents mega-caps from dominating small-caps with identical fundamentals.
🧩 The Components
📈 Why Is a Higher MAVI Better?
Higher MAVI is better. Here's why, factor by factor.
What MAVI Actually Measures
MAVI answers a single question: “How much real, tradeable earnings power am I buying per dollar of stock price?” Every factor in the formula pushes the score up when the answer to the sub-question is favorable.
1. 100 / PE — the earnings return on your dollar
PE = 20 means you pay $20 for $1 of earnings. Flip it: 100 / 20 = 5 means a 5% earnings yield.
- PE 10 → 10% yield (good)
- PE 50 → 2% yield (bad)
This is the single most important factor. A high MAVI stock is fundamentally a cheap stock relative to its earnings. Higher earnings yield → higher MAVI ✓
2. Float / Total — how much of the company you can actually touch
A stock where 80% is publicly traded has real price discovery. A stock where only 10% floats has artificial scarcity, illiquidity risk, and a price that may not reflect reality.
- 80% float → 0.80 multiplier (good)
- 10% float → 0.10 multiplier (bad, penalized)
This factor penalizes companies where insiders lock up most of the shares — because the market price in those cases is less trustworthy. Higher float share → higher MAVI ✓
3. log₁₀(Float × Price) — the dollar depth of the tradeable market
This is a scale factor. It rewards companies with a large, meaningful capital base. But it's log-scaled so that the difference between a $10B company and a $100B company is one point, not 10x — preventing market cap from dominating the index.
- $10B float market cap → factor 10.0
- $100B float market cap → factor 11.0
- $1T float market cap → factor 12.0
Depth is valuable (liquidity, institutional access, narrower spreads), but we don't want it to swamp earnings quality. Deeper market → higher MAVI ✓
What a High MAVI Says About a Company
| MAVI Range | Interpretation |
|---|---|
| 80+ | Excellent value: cheap earnings, liquid float, meaningful market depth |
| 40–80 | Decent value: good on most dimensions |
| 10–40 | Mediocre: either expensive, illiquid, or both |
| < 10 | Poor: overpriced earnings, thin float, or tiny |
| 0 | Unscorable: negative earnings or zero float |
Think of MAVI as: (Earnings rich) × (Market honest) × (Market deep)
When all three are high, you have a stock that's:
- Cheap on an earnings basis
- Transparent because most shares actually trade
- Liquid because there's real money in the pool
A low MAVI means at least one of those is broken — and likely more than one.
📊 Worked Examples
🔮 How the Ranking Plays Out
The mid-cap value play edges out the large-cap despite being smaller because its cheaper earnings multiple more than compensates for the slight float and depth disadvantage. The growth stock gets crushed — high P/E and thin float. Small value beats big growth every time under MAVI.
⚠️ Edge Cases
- Negative P/E → MAVI = 0. No earnings means the index can't speak to value.
- Zero float → MAVI = 0. Fully locked shares have no market price discovery.
- Penny stocks → Log scaling prevents sub-$1 stocks from gaming the formula.
MAVI is not financial advice. It's a single composite metric — do your own research.
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