What is Clear Channel Outdoor Holdings 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.
Clear Channel Outdoor Holdings 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
Clear Channel Outdoor Holdings Business Description
Traded in Other Exchanges
Address
4830 North Loop 1604 West, Suite 111, San Antonio, TX, USA, 78249
Clear Channel Outdoor Holdings Inc is one of the world's largest outdoor advertising companies. The company is engaged in providing advertising opportunities through billboards, street furniture displays, transit displays, and other out-of-home advertising displays for its clients. Its reportable segment includes America; Airports; Europe-North and Europe-South. The company generates maximum revenue from the America segment. The America segment serves markets throughout the U.S., with over 90% of its revenue generated from billboard displays.
Executives
| Pacific Investment Management Co Llc |
10 percent owner |
650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660 |
| Ares Management Llc |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Asof Ii A (de) Holdings I, L.p. |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Asof Ii Holdings I, L.p. |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Justin Cochrane |
officer: CEO, UK & Europe |
4830 NORTH LOOP 1604W, SUITE 111, SAN ANTONIO TX 78249 |
| Ares Voting Llc |
10 percent owner |
C/O ARES MGMT, 2000 AVE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Assf Operating Manager Iv, L.p. |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Acof Investment Management Llc |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Ares Holdco Llc |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Ares Management Gp Llc |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Ares Partners Holdco Llc |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Ares Management Holdings L.p. |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FL, LOS ANGELES CA 90067 |
| Ares Management Corp |
10 percent owner |
2000 AVE OF THE STARS, 12TH FLOOR, LOS ANGELES CA 90067 |
| Asof Investment Management Llc |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, C/O ARES MANAGEMENT, LOS ANGELES CA 90067 |
| Asof Holdings I, L.p. |
10 percent owner |
2000 AVENUE OF THE STARS, 12TH FLOOR, C/O ARES MANAGEMENT LLC, LOS ANGELES CA 90067 |
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