Shore Bancshares (Shore Bancshares) Predictability Rank

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What is Shore Bancshares 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.

Shore Bancshares 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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Shore Bancshares (Shore Bancshares) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Shore Bancshares Inc (NAS:SHBI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

18 East Dover Street, Easton, MD, USA, 21601

Website

https://www.shorebancshares.com

Shore Bancshares Inc is a financial holding company. It offers personalized banking, insurance, and investment services to families and businesses in the Mid-Atlantic region. It operates in two business segments - community banking and mortgage banking. Community banking is conducted through the Bank and involves delivering a broad range of financial services, including lending and deposit-taking, to individuals and commercial enterprises, it also includes treasury and administrative functions. Mortgage banking is conducted through the Bank's secondary marketing department and involves originating first and second-lien residential mortgages for sale in the secondary market.

Executives

John Lamon	director	62 EAST LAKE DRIVE, ANNAPOLIS MD 21403
Dawn M. Willey	director	18 E. DOVER STREET, EASTON MD 21601
Kelly Clyde V. Iii	director	28969 INFORMATION LANE, EASTON MD 21601
Konrad Wayson	director	5378 SUDLEY ROAD, WEST RIVER MD 20778
Christy Lombardi	officer: Chief Human Resources Officer	3035 LEONARDTOWN ROAD, WALDORF MD 20601
Slater A Joseph Jr	director	3035 LEONARDTOWN ROAD, WALDORF MD 20601
Jenkins Louis P Jr	director	3035 LEONARDTOWN ROAD, WALDORF MD 20601
Stone Joseph V Jr	director	C/O TRI-COUNTY FINANCIAL CORPORATION, 3035 LEONARDTOWN ROAD, WALDORF MD 20601
James M Burke	director, officer: President & CEO	3035 LEONARDTOWN ROAD, WALDORF MD 20601
Mary Todd Peterson	director	3035 LEONARDTOWN ROAD, WALDORF MD 20601
Todd L Capitani	officer: EVP & CFO	3035 LEONARDTOWN ROAD, WALDORF MD 20601
Sanders Edward Lawrence Iii	director	C/O THE COMMUNITY FINANCIAL CORPORATION, 3035 LEONARDTOWN ROAD, WALDORF MD 20601
Brian Scot Ebron	officer: Chief Banking Officer	C/O THE COMMUNITY FINANCIAL CORPORATION, 3035 LEONARDTOWN ROAD, WALDORF MD 20601
Tala Tay	officer: Chief Risk Officer	C/O THE COMMUNITY FINANCIAL CORPORATION, 3035 LEONARDTOWN ROAD, WALDORF MD 20601
Rebecca Middleton Mcdonald	director	C/O THE COMMUNITY FINANCIAL CORPORATION, 3035 LEONARDTOWN ROAD, WALDORF MD 20601