METHODOLOGY · THE GLASS-BOX STANDARD

How we detect a financial hard contradiction.

BearSignal reads the entire U.S. and Hong Kong listed universe and surfaces the companies whose own numbers cannot all be true. We do it deterministically, and we show our work — every flag exposes the exact figures and the thresholds they crossed. This page explains the method and why it is defensible.

BearSignal raises gray flagsdetected hard contradictions, pending confirmation. A gray flag is a statistical contradiction in a company's own disclosures, surfaced for forensic review. It is not a verdict, not an accusation of fraud, and not investment advice. Every flag is reviewed and judged by analysts before any thesis is published.

The method, in three moves

The machine reads at scale; analysts confirm and judge. No watchlist, no sampling, no ranking by opinion.

01 · READ

Read the whole universe

Continuously read every U.S. and Hong Kong listed company — SEC EDGAR and HKEX filings, financial history, ownership records — reconstructed into a comparable financial picture per company, per fiscal period.

02 · TEST

Test for internal contradiction

Run each company through independent forensic dimensions that test whether its own figures can all be true at once — accruals vs. cash, ratios vs. peers, price vs. fundamentals, disclosure clarity. A contradiction fires only on an absolute threshold, never on rank or opinion.

03 · CONFIRM

Analysts confirm before publishing

A gray flag is a starting point for investigation, not a conclusion. Every flag is reviewed and judged by analysts, and evidence is anchored to source filings, before any thesis is published.

The five contradiction dimensions

A hard contradiction is rarely one number — it is a healthy-looking headline that several independent forensic lenses disagree with at once. Each dimension is computed from the company's own filings, with a fixed formula and an absolute threshold. When a dimension crosses its threshold, the exact value and direction are recorded.

Accruals
Sloan

How much of reported earnings is driven by accruals rather than cash. Earnings that outrun cash flow are lower-persistence and a classic contradiction signal.

direction: higher = accruals outrunning cash
Ratio Profile
Beneish

A composite of accrual, margin, and leverage ratios. An elevated profile is consistent with an earnings-management-like pattern — surfaced for review, never asserted as intent.

direction: higher = more manipulation-like
Multivariate Anomaly
Mahalanobis

The distance of a company's whole financial vector from its peer distribution. A large distance means the company is a statistical outlier against comparable firms.

direction: higher = more anomalous vs. peers
Market Divergence
Price vs. Fundamentals

Where market pricing diverges from the fundamental signal — the tape and the books telling different stories.

direction: price diverging from fundamentals
Disclosure Readability
L5 · Narrative

The readability of the annual-report narrative. Extreme obfuscation correlates with disclosure risk — clarity is a feature, not a footnote.

direction: less readable = more obfuscated
Composite
e-process

The dimensions combine through a martingale e-process with a false-positive certificate — so the bar to raise a flag is statistically controlled, not a hand-set score.

point-in-time: the values as seen when flagged

Glass box, not black box

We never ask you to trust a score. Every gray flag shows the exact figure on each dimension that fired, the threshold it crossed, the direction, and the fiscal filing it came from — frozen at the moment of the flag (point-in-time). Below is the shape of what a gray-flag detail shows (illustrative).

Sloan Accruals
0.104  flag > 0.05
Beneish M-Score
−1.00  flag > −1.78
Mahalanobis Distance
below 4.3 — not fired (shown for transparency)
FY2025 · detected hard contradiction · pending analyst confirmation · not a verdict

Why it is defensible

Deterministic

Fixed formulas and absolute thresholds. The same filings produce the same flag — no rank, no opinion, no after-the-fact tuning.

Point-in-time

Each flag records the values exactly as they stood when it fired — what we saw, when we saw it, auditable later.

Sourced & auditable

Every contradiction is anchored to the source filing and fiscal period, built to withstand scrutiny.

Human-confirmed

The engine reads at scale; analysts confirm and judge before any thesis is published. A flag is the start of work, not the end.

See the gray flags.

The full forensic files — with the per-dimension figures behind each gray flag — are open to qualified institutions. Request access and we will be in touch.

Request Institutional Access View Investigations →