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Diamond Resorts International (Diamond Resorts International) Predictability Rank


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What is Diamond Resorts International 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.


Diamond Resorts International 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

Diamond Resorts International Predictability Rank Related Terms

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Diamond Resorts International (Diamond Resorts International) Business Description

Traded in Other Exchanges
N/A
Address
Diamond Resorts International Inc was incorporated as a Delaware corporation on January 11, 2013. The Company provides hospitality and vacation ownership services. The Company has an ownership base of more than 527,000 owner-families, or members, and a network of 307 vacation destinations located in 33 countries throughout the continental United States (U.S.), Hawaii, Canada, Mexico, the Caribbean, Central America, South America, Europe, Asia, Australia and Africa. Its resort network includes 93 resort properties with approximately 11,000units that they manage and 210 affiliated resorts and hotels and four cruise itineraries. The Company offers Vacations of a LifetimeTM--a simple way to acquire a lifetime of vacations at top destinations worldwide. The Company also manages seven multi-resort trusts. The Company operates the front desks, provide housekeeping, conduct maintenance and manage human resources services. It also operates, or outsource the operation of, amenities such as golf courses, food and beverage venues and retail shops, and the company provides an online reservation system, a customer service contact center, rental services, billing services, account collections, accounting and treasury functions and communications and information technology services. In addition to resort services, key components of its business are the Clubs, which enable its members to use their points to stay at resorts in its network. The Clubs offer its members a range of other benefits, such as the opportunity to purchase various products and services including consumer electronics, home appliances and insurance products from third parties at discounted prices. The Company's clubs include THE Club, which is the primary Club sold, and provides members access to all resorts in its network and offers the full range of member services, as well as other Clubs that enable their members to use their points to stay at specified resorts in its network and provide their members with a more limited offering of benefits. The Company refers to THE Club and other Club offerings as "the Clubs." . The vacation ownership industry enables individuals and families to purchase VOIs, which facilitates shared ownership and use of fully-furnished vacation accommodations at a particular resort or network of resorts. The Company markets and sells VOIs that provide access to its network of 93 Diamond Resorts managed resorts and 210 affiliated resorts and hotels and four cruise itineraries. The Company provides loans to eligible customers who purchase VOIs through its U.S., Mexican and St. Maarten sales centers and choose to finance their purchase. In marketing and selling VOIs, the company competes against the vacation ownership divisions of several established hospitality companies. These companies include Bluegreen Corporation, Disney (Disney Vacation Club), Four Seasons Resorts and Hotels, Hilton (Hilton Grand Vacations), Marriott Vacations Worldwide Corporation
Executives
Richard M Daley director THE COCA-COLA COMPANY, ONE COCA-COLA PLAZA, ATLANTA GA 30313
Hope S Taitz director C/O ATHENE HOLDING LTD., WASHINGTON HOUSE, 16 CHURCH STREET, HAMILTON D0 HM 11
Jeffrey W Jones director P O BOX 7, VAIL CO 81658
David J Berkman director 110 WASHINGTON STREET, SUITE 1300, CONSHOHOCKEN PA 19428
B. Scott Minerd director 2455 CORPORATE WEST DRIVE, LISLE IL 60532