What is Kimbell Royalty Partners LP 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.
Kimbell Royalty Partners LP 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
Kimbell Royalty Partners LP (Kimbell Royalty Partners LP) Business Description
Traded in Other Exchanges
Address
777 Taylor Street, Suite 810, Fort Worth, TX, USA, 76102
Kimbell Royalty Partners LP owns and acquires mineral and royalty interests in oil and natural gas properties throughout the United States. The company's basins and producing regions include areas of interest in the Permian Basin, Mid-Continent, Terryville/Cotton Valley/Haynesville, Appalachian Basin, Eagle Ford, Bakken/Williston Basin, and DJ Basin/Rockies/Niobrara. Its revenues are derived from royalty payments received from operators based on the sale of oil, natural gas, and NGL production, as well as the sale of NGLs that are extracted from natural gas during processing.
Executives
| T Scott Martin |
director |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Blayne Rhynsburger |
officer: Controller |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Mitch S. Wynne |
director |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Mb Minerals, L.p. |
10 percent owner |
800 NORTH SHORELINE BLVD., SUITE 900N, CORPUS CHRISTI TX 78401 |
| Sabalo Midland Basin, Inc. |
10 percent owner |
800 NORTH SHORELINE BLVD., SUITE 900N, CORPUS CHRISTI TX 78401 |
| Encap Energy Capital Fund Ix, L.p. |
10 percent owner |
9651 KATY FREEWAY, SUITE 600, HOUSTON TX 77024 |
| Erik B Daugbjerg |
director |
3141 HOOD STREET, SUITE 500, DALLAS TX 75219 |
| Brett G. Taylor |
director |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Pep I Holdings, Llc |
10 percent owner |
C/O ENCAP INVESTMENTS L.P., 1100 LOUISIANA STREET, SUITE 4900, HOUSTON TX 77002 |
| Kkr Upstream Associates Llc |
10 percent owner |
C/O KKR, 9 WEST 57TH STREET, SUITE 4200, NEW YORK NY 10019 |
| Kkr Group Partnership L.p. |
10 percent owner |
C/O KOHLBERG KRAVIS ROBERTS & CO. L.P., 30 HUDSON YARDS, NEW YORK NY 10001 |
| Robert D. Ravnaas |
director, officer: Chief Executive Officer |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Peter Alcorn |
officer: Vice President-Land |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Matthew S. Daly |
officer: Senior V.P.-Corp. Development |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
| Robert Davis Ravnaas |
officer: President and CFO |
777 TAYLOR STREET, SUITE 810, FORT WORTH TX 76102 |
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