Data Storage (Data Storage) Predictability Rank

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What is Data Storage 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.

Data Storage 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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Data Storage (Data Storage) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Data Storage Corp (NAS:DTST) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

48 South Service Road, Suite 203, Melville, NY, USA, 11747

Website

https://www.dtst.com

Data Storage Corporation engages in providing cybersecurity, compliance and cloud computing solutions. The company's segment includes Nexxis Inc; Flagship Solutions, LLC and CloudFirst Technologies Corporation and Corporate. It generates maximum revenue from the CloudFirst Technologies Corporation segment. The company's solutions include infrastructure, disaster recovery, email archival, compliance, electronic vaulting, virtualized recovery, telecom recovery services, and continuous data protection.

Executives

Mark Alexander Wyllie	director	980 N. FEDERAL HWY, SUITE 302, BOCA RATON FL 33432
Christos Panagiotakos	officer: Chief Financial Officer	1013 PLANDOME ROAD, MANHASSET NY 11030
Wendy Schmittzeh	other: Secretary	C/O DATA STORAGE CORPORATION, 48 S. SERVICE ROAD, SUITE 203, MELVILLE NY 11747
Matthew Grover	director	C/O DATA STORAGE CORPORATION, 48 S. SERVICE ROAD, SUITE 203, MELVILLE NY 11747
Todd A. Correll	director	222 LAKEVIEW AVENUE, SUITE 1600, WEST PALM BEACH FL 33401
Thomas Kempster	director, 10 percent owner, officer: COO, Pres of Tech Ops & Secy	C/O DATA STORAGE CORPORATION, 68 SOUTH SERVICE ROAD, MELVILLE NY 11747
Harold Schwarts	director, 10 percent owner, officer: President and Treasurer	C/O DATA STORAGE CORPORATION, 68 SOUTH SERVICE ROAD, MELVILLE NY 11747
Charles M. Piluso	director, 10 percent owner, officer: Pres/CEO/CFO/Chairman	C/O DATA STORAGE CORPORATION, 48 S. SERVICE ROAD, SUITE 203, MELVILLE NY 11747
Piluso Family Associates, Llc	10 percent owner	495 MANHASSET WOODS ROAD, MANHASSET NY 11030
Jan Burman	director, 10 percent owner	875 MERRICK AVENUE, WESTBURY NY 11590
John F. Coghlan	director, 10 percent owner	36 VASSAR PLACE, ROCKVILLE CENTRE NY 11570
Clifford Stein	director	5345 PINE TREE DRIVE, MIAMI BEACH FL 33140
Joseph B. Hoffman	director	9204 REDWOOD AVE, BETHESDA MD 20817
Matthew P Grosso	officer: Secretary, Treasurer and, other: Vice President	19 HASTING DRIVE, STONY BROOK NY 11790
Peter W Briggs	officer: Vice President	152 CROMPTON AVENUE #4, EAST GREENWICH RI 02818