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Diamond Foods (Diamond Foods) Predictability Rank


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What is Diamond Foods 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.


Diamond Foods 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

Diamond Foods Predictability Rank Related Terms

Thank you for viewing the detailed overview of Diamond Foods's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.


Diamond Foods (Diamond Foods) Business Description

Traded in Other Exchanges
N/A
Address
Diamond Foods Inc was incorporated in Delaware in 2005 as the successor to Diamond Walnut Growers, Inc., a member-owned California agricultural cooperative association. In July 2005, Diamond Walnut Growers, Inc. merged with and into Diamond Foods, Inc., converted from a cooperative association to a Delaware corporation and completed an initial public offering of Diamond Foods' common stock. The Company is a packaged food company focused on building and energizing brands. It is engaged in processing, marketing and distributing snack products and culinary, in-shell and ingredient nuts. The Company's segments include Snacks and Nuts. The Company sells snack products under Kettle Brand(r) and Pop Secret(r) brands. Microwave popcorn products are offered in traditional flavors. In March 2010, the Company complemented its snack portfolio with the acquisition of Kettle Foods, a premium potato chip company. Kettle Foods products are offered in a variety of flavors and sizes. Its snack products are typically available in grocery store snack, natural and produce aisles, mass merchandisers, club stores, convenience stores, drug stores, natural food stores and other places where snacks are sold. Under the nuts segment the Company sells nut products under the Emerald brand, and Diamond of California(r) brand in grocery store baking aisles and produce aisles and through mass merchandisers and club stores. Culinary nuts are marketed to individuals who prepare meals or baked goods at home and who value fresh, high-quality products. The Company also sell in-shell nuts under the Diamond of California(r) brand during the winter holiday season. Its non-retail nut business includes international markets and North American ingredient customers. It market ingredient nuts internationally under the Diamond of California(r) brand to food processors, restaurants, bakeries and food service companies and their suppliers. Diamond's institutional and industrial customers use its standard or customer-specified products to add flavor and texture in their product offerings. It also sells in-shell nuts to international markets. Emerald products include roasted, glazed and flavored nuts, trail mixes, granola, dried fruit and similar offerings that are sold where snack nuts and convenient breakfast items are sold. The Company obtains its raw materials from domestic and international sources. The Company's products competes with other food industries. It is subject to governmental laws and regulations.
Executives
Edward A Blechschmidt director ONE HEALTHSOUTH PARKWAY, BIRMINGHAM AL 35243
Linda B Segre officer: EVP, Chief Strat. & People Ofc 2180 RUTHERFORD ROAD, CARLSBAD CA 92008
David Colo officer: EVP, Chief Operating Officer C/O DIAMOND FOODS, INC., 600 MONTGOMERY STREET, 13TH FLOOR, SAN FRANCISCO CA 94111
Richard Dean Hollis director 3603 HAVEN AVENUE, SUITE E, MENLO PARK CA 94025
Robert Zollars director 3061 ZANKER RD, SAN JOSEC CA 95134
Nigel A Rees director ONE POST STREET, SAN FRANCISCO CA 94104
Raymond Silcock officer: EVP & Chief Financial Officer 399 JEFFERSON ROAD, PARSIPPANY NJ 07054
Alison Davis director 255 FISERV DRIVE, BROOKFIELD WI 53045
Brian J Driscoll director, officer: President & CEO THREE LAKES DR, NORTHFIELD IL 60093
Celeste A. Clark director C/O ADVANCEPIERRE FOODS HOLDINGS, INC., 9987 CARVER ROAD, BLUE ASH OH 45242
Stephen Kim officer: EVP, GC & Chief Legal Officer CO DIAMOND FOODS INC., 600 MONTGOMERY STREET 33RD FLOOR, SAN FRANCISCO CA 94111
Oaktree Holdings, Inc. 10 percent owner 333 SOUTH GRAND AVENUE, 28TH FLOOR, LOS ANGELES CA 90071
Oaktree Capital Management Lp 10 percent owner 333 S GRAND AVE 28TH FL, LOS ANGELES CA 90071
Oaktree Holdings, Llc 10 percent owner 333 SOUTH GRAND AVENUE, 28TH FLOOR, LOS ANGELES CA 90071
Ocm Holdings I, Llc 10 percent owner 333 SOUTH GRAND AVENUE, 28TH FLOOR, LOS ANGELES CA 90071

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