The Intergroup (The Intergroup) Predictability Rank

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What is The Intergroup 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.

The Intergroup 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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The Intergroup (The Intergroup) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Travel & Leisure » The Intergroup Corp (NAS:INTG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1516 S. Bundy Drive, Suite 200, Los Angeles, CA, USA, 90025

Website

https://www.intgla.com

The Intergroup Corp is an us-based company operating in the real estate sector. It is formed to buy, develop, operate, rehabilitate and dispose of real property of various types and descriptions, and to engage in other related business and investment activities. The company operates through three segments namely Hotel Operations, Real Estate Operations, and Investment Transactions. The Hotel Operations segment which generates the majority of the revenue covers the operation of the Hilton hotel and garage. The Real Estate Operations segment consists of the operation of multifamily rental properties whereas the Investment Transactions segment includes an investment of cash in marketable securities and other investments.

Executives

John C Love	director	11620 WILSHIRE BOULEVARD, SUITE 350, LOS ANGELES CA 90025
Babin C Jerold	director	11620 WILSHIRE BOULEVARD, SUITE 350, LOS ANGELES, LOS ANGELES CA 90025
William John Nance	director	11620 WILSHIRE BOULEVARD, SUITE 350, LOS ANGELES CA 90025
Danfeng Xu	officer: Treasurer and Controller	1100 GLENDON AVENUE, SUITE PH-1, LOS ANGELES CA 90024
Yvonne L Murphy	director	10940 WILSHIRE BLVD., SUITE 2150, LOS ANGELES X1 90024
David T Nguyen	officer: TREASURER	10940 WILSHIRE BLVD, SUITE 2150, LOS ANGELES CA 90024
Michael G Zybala	10 percent owner	PO BOX 270828, SAN DIEGO CA 92198-2828
John V Winfield	director, 10 percent owner, officer: President & CEO	11620 WILSHIRE BOULEVARD, SUITE 350, LOS ANGELES CA 90025
Michael Gary Zybala	officer: Asst. Secretary & Gen. Counsel	16912 ABUNDANTE ST, SAN DIEGO CA 92127
David C Gonzalez	officer: Vice President Real Estate
Gary N Jacobs	director, officer: Secretary	MGM MIRAGE, 3600 LAS VEGAS BLVD., S., LAS VEGAS NV 89109
Josef A Grunwald	director	820 MORAGA DRIVE, LOS ANGELES CA 90049
Mildred Bond Roxborough	director	39 BROADWAY, SUITE 2200, NEW YORK NY 10006