Putnam Municipal Opportunities Trust (Putnam Municipal Opportunities Trust) Predictability Rank

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What is Putnam Municipal Opportunities Trust Predictability Rank?

Not Rated

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Putnam Municipal Opportunities Trust Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Putnam Municipal Opportunities Trust (Putnam Municipal Opportunities Trust) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » Putnam Municipal Opportunities Trust (NYSE:PMO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

100 Federal Street, Boston, MA, USA, 02110

Website

https://www.putnam.com

Putnam Municipal Opportunities Trust is a non-diversified closed-end management investment company. It seeks to provide as high a level of current income free from federal income tax as Putnam Management believes is consistent with the preservation of capital. The fund invests in healthcare, utilities, transportation, tax bonds, local debt, state debt, and education.

Executives

Stephen R Denny	officer: Head HR- Diversity & Inclusion, other: Putnam Investments	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Aaron M Cooper	officer: Dir. Global Equity Research, other: Putnam Investments	100 FEDERAL STREET, BOSTON MA 02110
Manoj P Singh	director	PUTNAM INVESTMENTS, ONE POST OFFICE SQUARE, BOSTON MA 02109
Carlo Forcione	officer: Head of Product and Strategy, other: Putnam Investments	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Catherine Saunders	officer: Head,Corporate Sustainability, other: and Public Policy - Putnam Inv	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Mona Sutphen	director	777 HIDDEN RIDGE, IRVING TX 75038
Marie Pillai	director	C/O PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Jacquelyn S Vanderbrug	officer: Headof Sustainability Strategy, other: Putnam Investments	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Jennifer Murphy	director	LEGG MASON, INC., 100 INTERNATIONAL DRIVE, BALTIMORE MD 21202
Brendan T Murray	officer: Head of Global Inv. Strategies, other: Putnam Investments	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Alan Mccormack	officer: Vice President and, other: Derivatives Risk Manager	PUTNAM INVESTMENTS, 16 ST. JAMES'S STREET, LONDON X0 SW1A 1ER
Martin Lemaire	officer: Vice President and, other: Derivatives Risk Manager	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Steven P Mckay	officer: Head of Global DCIO, other: Putnam Investments	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Kaitlin May	officer: Head of Global Institutional, other: Management /Putnam Investments	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110
Stephen J Tate	officer: General Counsel, other: Chief Legal Officer/Putnam Inv	PUTNAM INVESTMENTS, 100 FEDERAL STREET, BOSTON MA 02110