GSI Technology (GSI Technology) Predictability Rank

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What is GSI Technology 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.

GSI Technology 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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GSI Technology (GSI Technology) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Semiconductors » GSI Technology Inc (NAS:GSIT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1213 Elko Drive, Sunnyvale, CA, USA, 94089

Website

https://www.gsitechnology.com

GSI Technology Inc is a provider of semiconductor memory solutions. The company develops and markets high-performance memory products, including Very Fast static random access memory, or SRAM, that are incorporated in high-performance networking and telecommunications equipment, such as routers, switches, wide area network infrastructure equipment, wireless base stations, and network access equipment. It sells these products to original equipment manufacturers, and customers including Nokia. In addition, it serves the ongoing needs of the military, aerospace, industrial, test and measurement equipment, and automotive and medical markets for high-performance SRAMs. It operates geographically in China, Singapore, the Netherlands, Germany, Rest of the world, and the United States.

Executives

Robert Yau	director, officer: VP, Engin., Sect. & Director	GSI TECHNOLOGY, INC., 2360 OWEN STREET, SANTA CLARA CA 95054
Avidan Akerib	officer: VP of Associative Computing	C/O GSI TECHNOLOGY, INC., 1213 ELKO DRIVE, SUNNYVALE CA 94089
Elizabeth Cholawsky	director	1636 LA VISTA DEL OCEANO, SANTA BARBARA CA 93109
Ruey-lin Lu	director	EMPIA TECHNOLOGY, 2600 AUGUSTINE DRIVE, SANTA CLARA CA 95054
Douglas Schirle	officer: CFO	GSI TECHNOLOGY, INC., 1213 ELKO DRIVE, SUNNYVALE CA 94089
Didier Lasserre	officer: VP, Sales	GSI TECHNOLOGY, INC., 2360 OWEN STREET, SANTA CLARA CA 95054
Hong-po Hsieh	director	20 PARK AVE. II, HSINCHU SCIENCE PARK, HSINCHU F5 308
Kim Le	director	1608 PALA RANCH CIRCLE, SAN JOSE CA 95133
Jack A. Bradley	director	C/O GSI TECHNOLOGY, INC., 1213 ELKO DRIVE, SUNNYVALE CA 94089
Arthur O Whipple	director	870 WEST MAUDE AVE, SUNNYVALE CA 94085
Ping Tak Wu	officer: VP, U.S. Operations	GSI TECHNOLOGY, INC., 2360 OWEN STREET, SANTA CLARA CA 95054
Barbara H Nelson	director	C/O QUANTUM CORP, 501 SYCAORE DR, MILPITAS CA 95035
Bor-tay Wu	officer: VP, Taiwan Operations	GSI TECHNOLOGY, INC., 1213 ELKO DRIVE, SANTA CLARA CA 94089
Lee-lean Shu	director, 10 percent owner, officer: Pres., CEO and Chairman	GSI TECHNOLOGY, INC., 1213 ELKO DRIVE, SANTA CLARA CA 94089
E Thomas Hart	director	1277 ORLEANS DRIVE, SUNNYVALE CA 94089-1138