What is Sphere 3D Predictability Rank?
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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.
Sphere 3D 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
Sphere 3D (Sphere 3D) Business Description
Traded in Other Exchanges
Address
4 Greenwich Office Park, Suite 100, 1st Floor, Greenwich, CT, USA, 06831
Sphere 3D Corp provides solutions for stand-alone storage and technologies that converge the traditional silos of compute, storage, and network into integrated hyper-converged or converged solution. Its Disk systems include HVE Converged and Hyper-converged Infrastructure. It generates the majority of its revenue from the services it offers. All of its revenue comes from the Americas. The Company has two operating segments: Digital Mining and Service and Product. The Digital Mining segment generates revenue from the digital currency, it earns through its bitcoin mining activities. The Service and Product segment generates revenue from long-term customer contracts for service contracts and extended service contract and the sale of products related to the Company's data storage product line.
Executives
| Kurt L. Kalbfleisch |
officer: SVP and CFO |
C/O OVERLAND STORAGE, INC., 4820 OVERLAND AVENUE, SAN DIEGO CA 92123 |
| Joseph O'daniel |
officer: President |
100 EXECUTIVE CT. , SUITE 2, WAXAHACHIE TX 75165 |
| Patricia Trompeter |
director, officer: CEO |
309 LUKES WOOD ROAD, NEW CANAAN CT 06840 |
| Duncan J Mcewan |
director |
SPHERE 3D CORP, 9112 SPECTRUM CENTER BLVD, SAN DIEGO CA 92123 |
| Timothy P. Hanley |
director |
9796 NICKEL RIDGE CIRCLE, NAPLES FL 34120 |
| David C. Danziger |
director |
717 WAREHOUSE STREET, LOS ANGELES CA 90021 |
| Sue Harnett |
director |
P.O. BOX 195115, SAN JUAN PR 00919-5115 |
| Vivekanand Mahadevan |
director |
OVERLAND STORAGE, INC., 9112 SPECTRUM CENTER BLVD., SAN DIEGO CA 92123 |
| Mf Ventures, Llc |
10 percent owner |
201 SPEAR STREET, 14TH FLOOR, SAN FRANCISCO CA 94105 |
| Cyrus Capital Partners, L.p. |
10 percent owner |
65 EAST 55 STREET, 35TH FLOOR, NEW YORK NY 10022 |
| Fbc Holdings S.a.r.l. |
10 percent owner |
C/O CYRUS CAPITAL PARTNERS, L.P., 65 EAST 55TH STREET, 35TH FLOOR, NEW YORK NY 10022 |
| Stephen C Freidheim |
10 percent owner |
C/O CYRUS CAPITAL PARTNERS, L.P., 65 EAST 55TH STREET, 35TH FLOOR, NEW YORK NY 10022 |
| Cyrus Capital Partners Gp, Llc |
10 percent owner |
65 EAST 55TH STREET, 35TH FLOOR, NEW YORK NY 10022 |
| Jenny C Yeh |
officer: SVP & General Counsel |
SPHERE 3D CORP, 9112 SPECTRUM CENTER BLVD, SAN DIEGO CA 92123 |
| Eric Kelly |
director, officer: CEO & Chairman |
691 S. MILPITAS BLVD, MILPITAS CA 95035 |
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