CNO Financial Group (CNO Financial Group) Predictability Rank

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What is CNO Financial 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.

CNO Financial 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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CNO Financial Group (CNO Financial Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » CNO Financial Group Inc (NYSE:CNO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

COS:Germany

Address

11825 N. Pennsylvania Street, Carmel, IN, USA, 46032

Website

https://www.cnoinc.com

CNO Financial Group Inc is a holding company for a group of insurance companies that offers middle-income American consumers insurance and securities products through exclusive agents, independent producers, and direct marketing. Consumers are served through the phone, online, mail, face-to-face with agents, or sales channels. The company's operating segments include annuity, health, and life insurance product lines as well as the investment and fee revenue segments. Maximum revenue is generated from the health product line segment. Annuity premiums account for the majority of the total premiums collected. Annuity products include fixed index annuities, traditional fixed-rate annuities, and single-premium immediate annuity products.

Executives

Jeanne L. Linnenbringer	officer: EVP and COO	11825 N. PENNSYLVANIA ST., CARMEL IN 46032
Tarasi Rocco F Iii	officer: Chief Marketing Officer	C/O ITT EDUCATIONAL SERVICES INC, 13000 NORTH MERIDIAN STREET, CARMEL IN 46032
John R Kline	officer: SVP & CAO	11825 N. PENNSYLVANIA STREET, CARMEL IN 46032
Yvonne K Franzese	officer: EVP and Chief HR Officer	200 LAKE STREET EAST, WAYZATA MN 55391
Karen Detoro	officer: Chief Actuary and CRO	C/O CNO FINANCIAL GROUP, INC., 11825 NORTH PENNSYLVANIA STREET, CARMEL IN 46032
Scott L. Goldberg	officer: President, Consumer Division	11825 N. PENNSYLVANIA STREET, CARMEL IN 46032
Gary C Bhojwani	director, officer: Chief Executive Officer	1 HORMEL PLACE, AUSTIN MN 55912
Steven E Shebik	director	2775 SANDERS ROAD, NORTHBROOK IL 60062
Brown Archie M Jr	director	255 E FIFTH STREET, CINCINNATI OH 45202
Adrianne Lee	director	799 WEST COLISEUM WAY, MIDVALE UT 84047
Matthew J. Zimpfer	officer: EVP and General Counsel	11825 N. PENNSYLVANIA STREET, CARMEL IN 46032
Michael E. Mead	officer: EVP and CIO	11825 N. PENNSYLVANIA ST., CARMEL IN 46032
Frederick James Sievert	director	260 SOUTH LAKE DRIVE, STAMFORD CT 06903
Chetlur S Ragavan	director	230 PARK AVENUE, NEW YORK NY 10169
Dan Maurer	director	C/O ZAGG INC., 3855 SOUTH 500 WEST, SUITE N, SALT LAKE CITY UT 84115