Amrep (AXR) Predictability Rank

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What is Amrep 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.

Amrep 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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Amrep (AXR) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » Real Estate » Amrep Corp (NYSE:AXR) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

850 West Chester Pike, Suite 205, Havertown, PA, USA, 19083

Website

https://www.amrepcorp.com

Amrep Corp through its subsidiaries is engaged in the Real estate business. Its activities include land sales and lease activities, which involve the obtaining of approvals and the sale of both developed and undeveloped lots to homebuilders, commercial users, and others, as well as investments in commercial and investment properties. Its operating segments include Land development and Homebuilding. The firm generates a majority of its revenue from the Land development segment. Geographically, all the activities are carried out throughout the United States.

Executives

James H Dahl	10 percent owner	1200 RIVERPLACE BLVD SUITE 902, 1200 RIVERPLACE BLVD SUITE 902, JACKSONVILLE FL 32207
Robert Robotti	director	125 PARK AVENUE, SUITE 1607, NEW YORK NY 10017
Cloues Edward B Ii	director	PENN VIRGINIA CORPORATION, FOUR RADNOR CORP. CTR., SUITE 200, RADNOR PA 19087
Rainey E. Lancaster	10 percent owner	1 APPLE PARK WAY, CUPERTINO CA 95014
Nick G Karabots	director, 10 percent owner
Gate City Capital Management, Llc	10 percent owner	425 S. FINANCIAL PLACE, STE 910A, CHICAGO IL 60605
Theodore J. Gaasche	director	1521 GREEN VALLEY DRIVE, COLLEGEVILLE PA 19426
Adrienne Uleau	officer: VP, Finance & Accounting	1142 MYRTLEWOOD AVE, HAVERTOWN PA 19083
Heinrich Bauer (usa) Llc	10 percent owner	270 SYLVAN AVE, ENGELWOOD CLIFFS NJ 07632
Mcmonagle James Michael Jr	officer: VP and Chief Financial Officer	620 W. GERMANTOWN PIKE, SUITE 175, PLYMOUTH MEETING PA 19462
Robert E Wisniewski	officer: EVP and CFO	C/O K-TRON INTERNATIONAL, INC., ROUTES 55 & 553, PO BOX 888, PITMAN NJ 08071
Clifford Robert Martin	officer: VP and Chief Financial Officer	AMREP CORPORATION, 300 ALEXANDER PARK, SUITE 204, PRINCETON NJ 08540
Rory Burke	officer: Pres&CEO, Palm Coast Data, LLC	C/O AMREP CORPORATION, 300 ALEXANDER PARK, SUITE 204, PRINCETON NJ 08540
Christopher V Vitale	officer: Vice Pres., Gen. Counsel & Sec	AMREP CORPORATION, 300 ALEXANDER PARK, SUITE 204, PRINCETON NJ 08540
Peter M. Pizza	officer: Vice President and CFO	C/O AMREP CORPORATION, 300 ALEXANDER PARK, SUITE 204, PRINCETON NJ 08540