Unity Bancorp (Unity Bancorp) Predictability Rank

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What is Unity Bancorp 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.

Unity Bancorp 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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Unity Bancorp (Unity Bancorp) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Unity Bancorp Inc (NAS:UNTY) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

UTB:Germany

Address

64 Old Highway 22, Clinton, NJ, USA, 08809

Website

http://www.unitybank.com

Unity Bancorp Inc is a bank holding company that serves as a holding company for Unity Bank. It conducts a traditional and community-oriented commercial banking business and offers services, including personal and business checking accounts, time deposits, money market accounts and regular savings accounts. The company structures its specific services and charges in a manner designed to attract the business of the small and medium sized business and professional community, as well as that of individuals residing, working and shopping in its service area. The company engages in a wide range of lending activities and offers commercial, Small Business Administration, consumer, mortgage, home equity and personal loans.

Executives

Daniel C Sharabba	officer: Senior Retail Officer/SVP	C/O, 64 OLD HIGHWAY 22, CLINTON NJ 08809
Minsu Kim	officer: Chief Credit Officer/SVP	C/O, 64 OLD HIGHWAY 22, CLINTON NJ 08809
Vincent Geraci	officer: Director of Mortgage Lending	C/O, 64 OLD HIGHWAY 22, CLINTON NJ 08809
Souders Donald E. Jr.	director	C/O UNITY BANK, 64 OLD HIGHWAY 22, CLINTON NJ 08809
James R Davies	officer: Controller/FVP	C/O, 64 OLD HIGHWAY 22, CLINTON NJ 08809
Dallas Robert H Ii	director, 10 percent owner	C/O UNITY BANCORP INC, 64 OLD HIGHWAY 22, CLINTON NJ 08809
David D Dallas	director, 10 percent owner, other: Chairman of the Board	C/O UNITY BANCORP INC, 64 OLD HIGHWAY 22, CLINTON NJ 08809
George Boyan	officer: Chief Financial Officer	C/O, 64 OLD HIGHWAY 22, CLINTON NJ 08809
Wayne Courtright	director	9 MICHAEL COURT, MILLSTONE TOWNSHIP NJ 07726
John J Kauchak	officer: EVP/COO	C/O UNITYBANK CORP, 64 OLD HWY 22, CLINTON NJ 08809
Janice Bolomey	officer: EVP/CAO	C/O UNITY BANK, 64 OLD HIGHWAY 22, CLINTON NJ 08809
James Joseph Donovan	officer: Chief Lending Officer/SVP	C/O, 64 OLD HIGHWAY 22, CLINTON NJ 08809
Stephen Rooney	officer: Chief Lending Officer/1st SVP	212 DOLSON AVENUE, MIDDLETOWN NY 10940
Mark S Brody	director
Laureen Cook	officer: Chief Accounting Officer	C/O UNITY BANK, 64 OLD HIGHWAY 22, CLINTON NJ 08809