Coolpad Group (HKSE:02369) Predictability Rank

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What is Coolpad Group Predictability Rank?

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.

Coolpad Group 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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Coolpad Group (HKSE:02369) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Coolpad Group Ltd (HKSE:02369) » Definitions » Predictability Rank

Traded in Other Exchanges

CHWTF:USA

Address

Coolpad Information Harbor, No. 8 of Gaoxin North 1st Road, Hi-Tech Industry Park (Northern), Nanshan District, Shenzhen, CHN, 518057

Website

https://www.coolpad.com.hk

Coolpad Group Ltd is an investment holding company that develops and provides integrated solutions for smartphone sets, mobile data platform systems, and value-added businesses in Mainland China and internationally. It operates in two segments: Mobile Phone; and Property Investment. The Mobile Phone segment which derives the majority of revenue engages in the research, development, production, and sale of mobile phones and related accessories and the provision of wireless application service, and the property investment segment invests in properties for rental income potential and for capital appreciation. It generates a majority of its revenue from Mainland China.

Executives

Zhuo Kun	2101 Beneficial owner
Lin Weihao	2201 Interest of corporation controlled by you
Saints Aura Investment Holdings Limited	2101 Beneficial owner
Explorer Partner Corp.	2201 Interest of corporation controlled by you
Sai Growth Fund I, Lllp	2101 Beneficial owner
Sig Growth Holdco Gp, Llc	2201 Interest of corporation controlled by you
Sig Pacific Holdings, Lllp	2201 Interest of corporation controlled by you
Yass Jeffrey Steven	2201 Interest of corporation controlled by you
Colombus International Holdings, Inc.	2201 Interest of corporation controlled by you
Chen Jiajun	2201 Interest of corporation controlled by you
Great Splendid Holdings Limited	2201 Interest of corporation controlled by you
Great Shine Investment Limited	2101 Beneficial owner
Elite Mobile Limited	2101 Beneficial owner
Sky Favour Ventures Limited	2201 Interest of corporation controlled by you
Liu Feng	2101 Beneficial owner

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