Six weeks ago, Debs and Graham asked Claude Opus to build a DCF.
The result got a B-minus from Graham and a C from Debs. Missed calculations, questionable assumptions, no clear reasoning on why it was cutting corners.
This week they ran the exact same test — same prompt, same company, no additional guidance — on Anthropic's newest model, Fable 5. The result was a step-change neither Graham or Debs expected.
In this episode, Debs and Graham walk through the Fable 5 output in detail. Mid-year discounting handled correctly from the start ("it actually knows how investment bankers think").
Terminal value presented in two methods, perpetuity growth and EBITDA multiple, side by side. Weighted average cost of capital coming in at 10.6%, in line with typical investment banking assumptions.
Diluted share count calculated correctly with buybacks accounted for. The model even self-corrected mid-build when it detected a formula error. The Lululemon test produced a striking finding: the DCF implied 45% upside to the current share price, suggesting the market may have Lululemon materially wrong.
Six weeks ago, Claude Opus solved for a value in line with the current share price. This time, Fable 5 took a genuine view — it saw upside and said so.
They also cover the broader context: CVC's Wall Street Journal-covered use of an AI agent in the Sproutz sale process, what that means for banker fees, and Graham's real-world observation that AI has moved from being a calculator to genuinely forming views on valuations.
The verdict: A-minus from Graham, B-plus from Debs.
Graham's honest closing question: at $50 in credits per model, is DIY still faster? Fable 5's fate as Anthropic transitions it to usage-only pricing is genuinely uncertain, but the six-week leap the episode captures is not.
Key Discussion Points:
The six-week transformation: from B-minus/C on Claude Opus to A-minus/B-plus on Fable 5.
What Fable 5 is: Anthropic's newest release, its release history, and its credit-limited launch.
Mid-year discounting, terminal value approaches, and WACC calculations Fable 5 handled correctly.
The self-correction moment: AI detecting and fixing its own mid-build error.
The Lululemon finding: 45% implied upside to the current share price.
AI going from calculator to view-taker: what that shift means for how models should be used.
CVC's Sproutz sale process: AI agent in the data room, and what it signals for banker fees.
The debt-treatment miss: Fable 5's blind spot on lease liabilities.
The economic question: at $50 in credits per model, is DIY still faster?
WTBD Newsletter:
https://webmail.wallstreetprep.com/whats-the-big-deal
Follow Us On Socials:
LinkedIn: https://www.linkedin.com/company/wall-street-prep/
Instagram: https://www.instagram.com/wallstreetprep/
Resources: https://linktr.ee/wallstreetprep
