The landlord book. Cash flow from six sleeves, taxed where it stings least — plus a value sleeve that buys businesses, not yields.
Operating Manual · Rev. LC-2606-ATrack A is the income/landlord track: roughly 30% of capital spread across six income sleeves, built to throw off cash flow that's steady, diversified across sources, and placed in the accounts where its tax character hurts least. Where Track C compounds and Track B trades, Track A collects — it's the part of the system that pays you to hold.
The governing idea is asset location: ordinary-income sleeves go in tax-sheltered accounts where their unfavorable tax treatment is neutralized, while qualified-dividend sleeves can sit in taxable. Track A-2 then sits alongside as a different thing entirely — not yield-buying, but business-buying at a margin of safety.
Diversification here is by income source, not just by ticker — tax liens, T-bills, dividend equities, private credit, real estate, and bank balance sheets respond to different forces, so the cash flow doesn't all dry up at once.
Short T-bill ETF for the cash sleeve. Note: the state-tax exemption is worth zero in Florida — no state income tax to exempt.
Quality dividend equity. Qualified-dividend treatment is tax-advantaged — fine in taxable. The yield sleeve with an equity backbone.
Specialized real estate (not broad REIT beta). Ordinary-income-heavy distributions; location-sensitive for tax.
Large-bank dividends with balance-sheet leverage to rates. The most cyclical income sleeve; sized accordingly.
Business development companies — private-credit yield. High ordinary-income distributions: shelter them (Traditional IRA) where possible.
Statutory-rate certificates via county auctions (LienHub). Portfolio-level strategy beats parcel-level picking. Evaluate with HCPA / clerk records.
The single highest-leverage decision in Track A isn't which sleeve — it's which account. Ordinary-income sleeves belong in shelter; qualified-dividend sleeves can live in taxable. Getting this right is a quiet, permanent return boost no market move can take away.
| Sleeve | Tax character | Preferred location |
|---|---|---|
| BDCs | Ordinary income (high) | Traditional IRA |
| Niche REITs | Ordinary income | Traditional IRA |
| SGOV | Ordinary (no FL benefit) | Traditional / taxable |
| SCHD | Qualified dividends | taxable / Roth |
| Money-center banks | Qualified dividends | taxable |
| FL tax liens | Interest income | held directly |
Value investing's second home, and the opposite of the C-2 factor tilt. This is genuine concentrated, single-name value: estimating what a business is worth, buying it well below that, and holding until the market agrees or the thesis breaks. It's the hardest strategy in the system to make mechanical — its edge is the judgment no sizer can enforce. So the code's job changes: it doesn't make the call, it frames the discipline that keeps the call honest.
Every mechanic inverts Track B. B enters on a price trigger; A-2 enters on a margin of safety versus a conservative intrinsic-value estimate. B exits on a stop or a dated event; A-2 has no price stop at all — its only exit is the thesis breaking on fundamentals, or price reaching fair value. B sizes by 1% price-risk units; A-2 sizes by conviction and concentration caps, because a position with no stop can't be sized by stop distance. That total inversion is the tell that it's a separate system, not a Track B variant — the same lesson that built B-2 as its own sleeve.
The value-trap checklist — A-2's analogue of B's dated-catalyst requirement. Each must be true, or the name is rejected as a falling knife even if it's statistically cheap. Cheap is not a reason to buy a dying business.
def evaluate(t, capital):
mos = (t.iv_low - t.price) / t.iv_low # vs CONSERVATIVE intrinsic value
# Gate 0 — a falsifiable thesis must exist (A-2's 'catalyst' analogue):
if not t.thesis or not t.disconfirmers:
return reject("no falsifiable thesis — name what proves you wrong")
# Gate 1 — value-trap checklist FIRST. Cheap != buy if it's dying.
if not t.moat_durable: return reject("no moat — cheapness may be permanent")
if not t.balance_sheet_sound: return reject("can't survive a bad stretch")
if not t.earnings_real: return reject("earnings/FCF quality suspect")
if not t.not_secular_decline: return reject("secular decline — dying-cheap")
if not t.management_aligned: return reject("capital allocation misaligned")
# Gate 2 — margin of safety only AFTER the business passes:
if mos < 0.30: return reject(f"MoS {mos:.0%} < 30% — not cheap enough; wait")
# Sizing: conviction x concentration caps. NO 1% stop units — no stop exists.
pos = min(0.20 * (0.4 + 0.6*t.conviction), 0.20) # <=20% single position
return qualify(pos, exit_on="fundamentals breaking, not price falling")
# The trap check runs BEFORE the cheapness check on purpose: a statistically
# cheap, dying business has a big margin of safety AND is a falling knife.
# Order matters. The code can reject a knife; it cannot tell you a moat is real.
On demand, per business: python3 tracka2_value.py runs the gate on a thesis. Not a scanner — you run it when you're evaluating one company you've already researched.
A-2 runs as a three-stage pipeline, and the gate above is only the last stage. The full flow: the Scout sources neglected-corner candidates worth a read → you read the 10-Ks, build the conservative intrinsic-value range, and answer the value-trap checklist → evaluate() gates what clears margin-of-safety and the trap checks. The middle stage is irreducibly yours; the two ends are tooled. Below is the front door — the Scout.
A-2's front door: a sourcing screen that surfaces small, uncovered, complex, spun-off names worth a deep 10-K read. Its only job is to find good doors — it does not decide what's behind them. The value judgment happens downstream, in your reading and the evaluate() gate. Two prompts: a standing role, and the screen you fire.
You are the Track A-2 Neglect Scout — a SOURCING screen for a concentrated value sleeve. Your ONLY job is to surface candidates that live in the corners institutions are structurally barred from: small, uncovered, complex, spun-off. You do NOT decide whether they're good investments. You find names worth a deep 10-K read, and hand them off. WHAT QUALIFIES AS A NEGLECTED CORNER (a name needs at least TWO): - Small: roughly sub-$1B market cap (micro/small-cap), ideally sub-$500M. - Uncovered: few or no sell-side analysts; thin institutional ownership. - Complex: recent spinoff, post-bankruptcy equity, holding company / sum-of-parts, dual-class oddity, or a misunderstood segment masking the rest. - Forced-seller dynamics: spun off and being dumped by index funds that can't hold it; dropped from an index; tax-loss selling; post-deal orphan. WHAT TO EXCLUDE (these are NOT your pond — you have no edge here): - Any widely-covered large-cap. If a sector desk follows it, skip it. - Story/hype names, meme stocks, pre-revenue speculation, biotech binaries. - Anything where the cheapness is obvious AND the business is clearly dying (a falling knife for the next stage to reject, not a sourcing target). HARD RULES: - Every name and every figure MUST come from a live search this session. If you cannot verify a company is real and roughly fits the size/neglect profile from a source, DROP it. Never invent tickers or fabricate financials. - You are NOT running a precise quantitative screen and must not pretend to. Where you can't verify an exact number, say so and give the source-based approximation, not a made-up precise figure. - Surface CANDIDATES, not conclusions. The value judgment happens downstream. Your bar is "neglected + plausibly cheap enough to be worth a 10-K read," not "this is a buy." - Conclusion first: the shortlist, then the reasoning.
Run the Track A-2 neglect screen now. Surface 8–15 candidate names from the neglected corners that are worth a deep value-research read. This is SOURCING, not analysis — find them, don't judge them. SEARCH THESE NEGLECT-RICH VEINS (adapt freely, ground everything in sources): 1. SPINOFFS — the richest vein. Forced index selling creates orphans. - "recent corporate spinoffs [current year]" / "upcoming spinoffs [current year]" - "spinoff stocks trading below fair value" / recently completed separations - Why they qualify: parent shareholders dump the small new co they didn't want; no analyst coverage yet; index funds forced to sell. 2. SMALL / MICRO-CAP NEGLECT - "microcap stocks no analyst coverage" - "small cap stocks trading below book value [current year]" - "net-net stocks [current year]" / "stocks below net current asset value" - profitable small-caps near 52-week lows (not story stocks) 3. COMPLEXITY-MASKED VALUE - "holding companies trading at discount to NAV [current year]" - "sum of the parts undervalued stocks" - post-bankruptcy / post-restructuring equities now profitable - "hidden value subsidiary" type situations 4. FORCED / ORPHAN SELLING - "stocks removed from index [recent]" (forced index-fund selling) - "tax loss selling candidates [current quarter]" - busted SPACs now with real operating businesses and cash FOR EACH CANDIDATE, report (from sources, approximations flagged as such): - Ticker + company, one line on what it does - Approx market cap + the neglect signals it hits (which 2+ of the criteria) - Why it may be mispriced (the surface thesis — one sentence) - Analyst coverage / institutional ownership level, if findable - One PRELIMINARY value flag IF visible: trades below book, low EV/EBIT, discount to NAV, sub-net-cash — clearly labeled as unverified/approximate - Source links THEN scan each for TRAP SIGNATURES — the reasons a name is cheap that make it a permanent impairment, not a temporary mispricing. Flag any that are visible from sources (you won't catch all; the 10-K read will catch more): - SECULAR DECLINE: structurally shrinking industry, eroding moat, melting earnings/book (newspapers, mall retail, disrupted legacy tech). Cheap-and-dying ≠ bargain. - GOVERNANCE RED FLAGS: controlled/family company that can squeeze minorities, related-party transactions, serial dilution, options-heavy insiders, value-destructive capital allocation history. - PERPETUAL DISCOUNT: holdco / closed-end / sum-of-parts with NO catalyst to ever close the gap and no motivated party to close it. Right on value, paid nothing for a decade. - BALANCE-SHEET TIME BOMB: refinancing wall it may not survive, going-concern language, buried pension/lease/environmental liabilities, debt due in a tight window. - FRAUD / RESTATEMENT RISK: auditor changes, late filings, restatements, revenue that doesn't tie to cash, recent reverse-merger/busted-SPAC, "too clean for how cheap it is." - UN-VALUABLE-BY-YOU: requires specialized knowledge to value (bank loan book, insurer reserves, biotech science, miner geology). Outside a generalist's circle → the IV anchor is fake. - BINARY / SPECULATIVE: pre-revenue, single drug/contract/customer/lawsuit determines everything, or the thesis needs the FUTURE to cooperate. That's prediction, not value. THEN, for each, give a quick PRE-SCREEN verdict: - WORTH A 10-K READ — clears neglect, plausibly cheap, NO visible trap signature - LIKELY TRAP — name the signature(s) above; flag, don't research - CAN'T VALUE — outside a generalist's circle of competence; skip regardless of cheapness - TOO COVERED / TOO BIG — fails the neglect filter, drop Rank the "worth a 10-K read" names first. End with the single most interesting neglected situation and one line on what specifically to investigate in its filings (the crux the value case turns on) — AND, for the most tempting LIKELY TRAP, one line on which signature would disqualify it, so the read isn't wasted. Remember: the question is never just "is it cheap?" — it's "WHY is it cheap, and is that reason temporary or permanent?" Every trap signature is a permanent reason masquerading as a temporary one. You are finding doors worth opening, not deciding what's behind them. The next stage reads the 10-K, builds the intrinsic-value range, and runs the value-trap checklist. Don't do its job; just find it good doors — and don't waste its time on obvious traps.
In A-2 the avoid-list earns its keep more than the hunt-list. The neglected corners are full of names that are neglected for good reason — and your edge is as much knowing which doors to leave shut as which to walk through. Every trap below is a permanent reason for cheapness wearing the costume of a temporary one. The Scout now flags these; here is the full reasoning.
A-2 raises an honest objection: if you can't compete with institutions on information, what is your edge here besides a long horizon? The answer is that your edge was never better information — it's adequate information about businesses they're structurally barred from analyzing. You don't out-research the professionals; you fish in the ponds they're not allowed in. Four edges, none of which is "I'll out-analyze a sector desk on a name they cover."
On a covered large-cap, fifty analysts beat you to the filing — the information field runs against you. On a $400M micro-cap, a sleepy regional operator, a misunderstood spinoff, the field is level because no institution is doing the work. A $20B fund can't take a position big enough to matter, so their analysts never open the 10-K. Your edge isn't reading it better than Citadel; it's that on these names Citadel never read it at all.
Hunt small · uncovered · complex · spun-offBecause you can hold five years, the question you must answer is structurally easier. An institution judged quarterly must forecast the next two prints — a hard, information-hungry problem you'd lose. You don't need Q3. You need to know whether this is a durable business below intrinsic value, worth more in five years — a question of quality and balance-sheet durability, not information edge. You opted into a different, easier exam your constraints let you take.
Horizon is the enabler, not the edge itselfA manager who buys a name that then drops 30% before working faces redemptions and career risk — so they can't own the temporarily-hated even when the thesis is sound. You can sit through the ugly middle. The discount on a good business after a bad quarter, or a spinoff index funds are forced to dump, exists because institutional constraints force the selling. You harvest a discount their rigidity creates.
Buy what their mandate forces them to sellSome of the best setups are orphans — too small for large-cap value funds, too profitable for deep-value screens, a hybrid no mandate covers. A charter that says "we buy X" can't touch them. You have no charter. The whole multi-track architecture is this freedom expressed; A-2 is one place you spend it.
Own the thing that fits nowhereNotice what every edge has in common: each points away from "compete on research" and toward "fish where they aren't." None is "I'll out-analyze professionals on a name they cover." The discipline that follows is strict — the moment an A-2 thesis is a widely-covered large-cap, you have no edge and the sleeve becomes a coin flip with extra steps. A-2 only earns its place when held to the neglected corners. "I think Disney is undervalued" is the failure mode: it's the game you correctly said you can't win.
Do you have a demonstrated edge in business analysis — a track record, even a paper one, of correctly judging small-business quality and intrinsic value — or only the desire to?
A-2's structural edges are real and defensible. Horizon enables them; the corners are where you win. Run the sleeve with conviction, held strictly to small, neglected, complex names.
A-2's edge is latent, not proven. Keep it small and treat it as deliberate practice — paper-trade theses, check them years later, build the record first. Or route the capital to C-2's value factor, which harvests most of the premium with none of the judgment requirement.
Track A is the ballast: cash flow that arrives whether or not the alpha sleeves fire, funding life and reinvestment so you never have to sell Track C at the wrong time. A-2 is the one place in the income track where you reach for capital gains instead of yield — and it's deliberately walled off with its own discretion-framing gate.
| Track | Role | Pays you via |
|---|---|---|
| A · six sleeves | Income/landlord (30%) | yield / interest |
| A-2 | Concentrated value | mispricing closing |
| C / C-2 | Compounding core (55%) | long-term beta + tilt |
| B / B-2 | Alpha (15%) | catalysts + trends |
Keep the lines separate. A-2's concentration caps (≤20% per name, ≤40% per sector) are internal to the sleeve — they don't borrow risk budget from the income sleeves, and the income sleeves don't lend cash to chase a value idea. Each lane funds itself.