Paramount Gold Nevada (Paramount Gold Nevada) Predictability Rank

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What is Paramount Gold Nevada 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.

Paramount Gold Nevada 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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Paramount Gold Nevada (Paramount Gold Nevada) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Paramount Gold Nevada Corp (AMEX:PZG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

P9G:Germany

Address

665 Anderson Street, Winnemucca, NV, USA, 89445

Website

https://www.paramountnevada.com

Paramount Gold Nevada Corp is an exploration-stage mining company. Together with its subsidiaries, it is engaged in the business of acquiring, exploring, and developing precious metal projects in the United States. Also, it explores for gold and silver. It enhances the value of projects by implementing exploration and engineering programs that are likely to expand and upgrade known mineralized material to reserves. Paramount tries to realize the value of its projects by selling its projects to producers; joint venturing its projects with other companies; or building and operating small mines on its own. Its projects include sleeper gold, grassy mountain gold, frost project; other non-material, and mineral resources.

Executives

Fcmi Parent Co.	10 percent owner	181 BAY STREET, SUITE 250, TORONTO A6 M5J 2T3
Charitable Foundation Buckingham	10 percent owner	467 LYTTON BLVD., TORONTO A6 M5N 1S5
Samantha Jane Espley	director	102 HIDDEN RIDGE COURT, SUDBURY A6 P3E 0G1
Rachel Louise Goldman	director, officer: Chief Executive Officer	4721 CIRCLE ROAD, MONTREAL A8 H3W 1Z2
Christopher J. Reynolds	director	40 UNIVERSITY AVE., SUITE 102, TORONTO A6 L6J 2K6
John Carden	director	925 NORTH HOMESTEAD DR., LIBERTY LAKE WA 99019
John W. Seaberg	director	C/O KLONDEX MINES LTD, 1055 WEST HASTINGS ST., SUITE 200, VANCOUVER A1 V6C 2E9
Van Treek Glen Alex	director, officer: President	VIRGINIA 7556 VITACURA, SANTIAGO F3 7630340
Rudi Fronk	director	33 LOMBARD STREET #4503, TORONTO A6 M5C 3H8
Carlo Buffone	officer: Chief Financial Officer	346 WAVERLEY STREET, OTTAWA A6 K2P0K6
David Stewart Smith	director	2997 ROSEBERY AVE, WEST VANCOUVER A1 V7V3A8
Pierre Clement Pelletier	director	911 KENNEDY AVE., NORTH VANCOUVER A1 V7R1L4
Fcmi Financial Corp Et Al	10 percent owner	BCE PLACE, 181 BAY STREET SUITE 250, TORONTO CANADA A6
Albert Friedberg	10 percent owner
Eliseo Gonzalez-urien	director	10911 CORP RANCH, ASHLAND OR 97520