What is Oxford Lane Capital 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.
Oxford Lane Capital 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
Oxford Lane Capital (Oxford Lane Capital) Business Description
Traded in Other Exchanges
Address
8 Sound Shore Drive, Suite 255, Greenwich, CT, USA, 06830
Oxford Lane Capital Corp is a non-diversified closed-end management investment company. The fund's investment objective is to maximize its portfolio's risk-adjusted total return over its investment horizon. Its current focus is to seek that return by investing in equity and junior tranches of CLO(collateralized loan obligation) vehicles, which are collateralized primarily by a diverse portfolio of senior loans, and which generally have little to no exposure to real estate loans, mortgage loans or pools of consumer-based debt, such as credit card receivables or auto loans. Its investment strategy also includes investing in warehouse facilities, which are financing structures intended to aggregate senior loans that may be used to form the basis of a CLO vehicle.
Executives
| Mark Jeffrey Ashenfelter |
director |
C/O OXFORD LANE CAPITAL CORP., 8 SOUND SHORE DRIVE, SUITE 255, GREENWICH CT 06830 |
| Wilton Reassurance Co |
10 percent owner |
20 GLOVER AVENUE, NORWALK CT 06850 |
| Eagle Point Credit Management Llc |
10 percent owner |
600 STEAMBOAT RD, SUITE 202, GREENWICH CT 06830 |
| Thomas P. Majewski |
10 percent owner |
600 STEAMBOAT RD, SUITE 202, GREENWICH CT 06830 |
| Eagle Point Dif Gp I Llc |
10 percent owner |
600 STEAMBOAT ROAD, SUITE 202, GREENWICH CT 06830 |
| Eagle Point Credit Gp I Lp |
10 percent owner |
600 STEAMBOAT RD, SUITE 202, GREENWICH CT 06830 |
| Saul B Rosenthal |
director, officer: President |
8 SOUND SHORE DR STE 215, GREENWICH CT 06830 |
| John Stuart Reardon |
director |
C/O OXFORD LANE CAPITAL CORP., 8 SOUND SHORE DRIVE, SUITE 255, GREENWICH CT 06830 |
| David S. Shin |
director |
C/O OXFORD LANE CAPITAL CORP., 8 SOUND SHORE DRIVE, SUITE 255, GREENWICH CT 06830 |
| Bruce L. Rubin |
officer: CFO, SEC, TREAS |
TICC CAPITAL CORP., 8 SOUND SHORE DRIVE, SUITE 255, GREENWICH CT 06830 |
| Gerald Cummins |
officer: Chief Compliance Officer |
C/O OXFORD LANE CAPITAL CORP., 8 SOUND SHORE DRIVE, SUITE 255, GREENWICH CT 06830 |
| Leroy Scott Frantz |
10 percent owner |
C/O HAEBLER CAPITAL, 8 SOUND SHORE DRIVE, GREENWICH CT 06830 |
| Patrick Conroy |
officer: CFO, CCO and Secretary |
8 SOUND SHORE DRIVE STE 215, GREENWICH CT 06830 |
| Jonathan H Cohen |
director, officer: Chief Executive Officer |
8 SOUND SHORE DR STE 215, GREENWICH CT 06830 |
| Charles M Royce |
10 percent owner |
C/O ROYCE & ASSOCIATES, LLC, 745 FIFTH AVENUE, NEW YORK NY 10151 |
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