Spectrum Group International (Spectrum Group International) Predictability Rank

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What is Spectrum Group 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.

Spectrum Group 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

	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

Spectrum Group International Predictability Rank Related Terms

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Spectrum Group International (Spectrum Group International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » Spectrum Group International Inc (OTCPK:SPGZ) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1063 McGaw, Suite 250, Irvine, CA, USA, 92614

Website

http://www.spectrumgi.com

Spectrum Group International Inc is an auctioneer of stamps, coins, arms, armor and militaria, and other memorabilia, targeting both collectors and dealers. It operates in two segments: Trading and Collectibles.The Trading segment operates through A-Mar.

Executives

Gregory N Roberts	director, 10 percent owner, officer: President and CEO	2625 ST ANDREWS, TUSTIN CA 92660
Carol Meltzer	officer: General Counsel and EVP	775 PASSAIC AVE, WEST CALDWELL NJ 07006
Jeffrey D Benjamin	director	9 WEST 57TH STREET, 43TH FLOOR, NEW YORK NY 10019
William A Richardson	10 percent owner	2880 LAS VEGAS BLVD SOUTH, LAS VEGAS NV 89109
William Montgomery	director	767 FIFTH AVENUE, 19TH FLOOR, NEW YORK NY 10153
Joel R Anderson	director	202 NORTH COURT STREET, FLORENCE AL 35630
Ellis Landau	director	CO PINNACLE ENTERTAINMENT INC, 8918 SPANISH RIDGE AVENUE, LAS VEGAS NV 89148
Jess M Ravich	director	11766 WILSHIRE BOULEVARD, SUITE 870, LOS ANGELES CA 90025
Silver Bow Ventures Llc	10 percent owner	C/O SPECTRUM GROUP INTERNATIONAL, 1063 MCGAW, IRVINE CA 92614
Moorhead John	director	5 FRANCIS J. CLARKE CIRCLE, BETHEL CT 06801
Nolan Christopher William Sr	director	15 TILGHMAN DRIVE, WAYNE NJ 07470
Thor Gjerdrum	officer: Chief Financial Officer & EVP	5 FRANCIS J. CLARKE CIRCLE, BETHEL CT 06801
Mark B Segall	director	251 WEST 89TH STREET APT 20, NEW YORK NY 10024
Matthew M Walsh	officer: CFO AND EXE. V.P.	ALLERGAN, 5 GIRALDA FARMS, MADISON NJ 07940

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