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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.
Hawaiian Holdings 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
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
Hawaiian Holdings (Hawaiian Holdings) Business Description
Traded in Other Exchanges
Address
3375 Koapaka Street, Suite G-350, Honolulu, HI, USA, 96819
Hawaiian Holdings Inc provides air transportation for passengers and cargo. Its primary asset is the sole ownership of Hawaiian Airlines. Routes are principally focused on transportation between the Hawaiian Islands, United States, and the South Pacific, Australia, New Zealand, and Asia. In addition, it operates various charter flights. The company markets through several distribution channels, including its own website, travel agencies, and wholesale distributors. Partnerships have been established with other airlines to accommodate customers, and the company also participates in a frequent-flyer program.
Executives
| Aaron J Alter |
officer: Exec VP & Chief Legal Officer |
3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Avi Mannis |
officer: See Remarks |
C/O HAWAIIAN HOLDINGS INC, 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Brent Overbeek |
officer: EVP. Chief Revenue Officer |
C/O HAWAIIAN HOLDINGS INC, 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Crystal Rose |
director |
47-460 WAIHEE PLACE, KANEOHE HI 96744 |
| Daniel W. Akins |
director |
C/O HAWAIIAN HOLDINGS INC, 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Richard N Zwern |
director |
3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Jonathan D. Snook |
officer: Executive VP and COO |
3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| William S Swelbar |
director |
C/O HAWAIIAN HOLDINGS, INC., 3375 KOAPAKA STREET SUITE G, HONOLULU HI 96819 |
| Wendy A. Beck |
director |
C/O NORWEGIAN CRUISE LINE HOLDINGS LTD., 7665 CORPORATE CENTER DRIVE, MIAMI FL 33126 |
| Craig Vosburg |
director |
2000 PURCHASE STREET, PURCHASE NY 10577 |
| Mark D. Schneider |
director |
C/O HAWAIIAN HOLDINGS INC., 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Donald J Carty |
director |
C/O DELL INC., ONE DELL WAY, ROUND ROCK TX 78682-2244 |
| Shannon Lei Okinaka |
officer: SVP and Interim CFO |
C/O HAWAIIAN HOLDINGS, INC., 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| Theodoros Panagiotoulias |
officer: SVP - Global Sales & Alliances |
C/O HAWAIIAN AIRLINES INC., 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
| H Jayne Hrdlicka |
director |
C/O HAWAIIAN HOLDINGS, INC., 3375 KOAPAKA STREET, SUITE G-350, HONOLULU HI 96819 |
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