OceanFirst Financial (OceanFirst Financial) Predictability Rank

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What is OceanFirst Financial 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.

OceanFirst Financial 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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OceanFirst Financial (OceanFirst Financial) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » OceanFirst Financial Corp (NAS:OCFC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

OCFCP.PFD:USA

Address

110 West Front Street, Red Bank, NJ, USA, 07701

Website

https://www.oceanfirst.com

OceanFirst Financial Corp is engaged in the banking sector of the United States. It conducts the business of attracting retail and business deposits and investing them in loans, consisting of single-family, owner-occupied residential mortgage loans, and commercial real estate loans. The company's sole segment deals with the delivery of loan and deposit products to customers. The bank's revenues are derived principally from interest on its loans, and to a lesser extent, interest on its investment and mortgage-backed securities. The rest of its income is dependent on bank card services and wealth management services.

Executives

John F Barros	director	975 HOOPER AVENUE, TOMS RIVER NJ 08753
Robert C Garrett	director	110 WEST FRONT STREET, RED BANK NJ 07701
Anthony Iii Giordano	other: Chief Retail Officer, OFB	4 KELLY LANE, LONG BRANCH NJ 07740
David Berninger	officer: EVP & Chief Risk Officer	975 HOOPER AVENUE, TOMS RIVER NJ 08753
Dalila Wilson-scott	director	110 WEST FRONT STREET, RED BANK NJ 07701
Oceanfirst Financial Corp	director	975 HOOPER AVENUE, TOMS RIVER NJ 08723
Brian Schaeffer	other: EVP & CIO, OceanFirst Bank	975 HOOPER AVENUE, TOMS RIVER NJ 08753
Joseph Iii Lebel	other: EVP, CBO OceanFirst Bank	975 HOOPER AVENUE, TOMS RIVER NJ 08754
Jack M. Farris	director	C/O OCEANFIRST BANK, 975 HOOPER AVE., TOMS RIVER NJ 08754
Christopher Maher	director, officer: Chairman, President and CEO	209 HAVEMEYER STREET, BROOKLYN NY 11211
Murphy Joseph M. Jr.	director	110 WEST FRONT STREET, RED BANK NJ 07701
Patrick Sean Barrett	officer: Executive Vice President & CFO	C/O FULTON FINANCIAL CORPORATION, ONE PENN SQUARE, LANCASTER PA 17602
Patrick Chong	other: SVP/Principal Accounting Off.	110 WEST FRONT STREET, RED BANK NJ 07701
Michael D Devlin	director	834 CENTRAL AVENUE, P.O. BOX 189, HAMMONTON NJ 08037
Nicos Katsoulis	director	C/O STATE BANCORP, INC., TWO JERICHO PLAZA, JERICHO NY 11753