EXE (Expand Energy) Predictability Rank

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What is Expand Energy 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.

Expand Energy 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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Expand Energy Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Expand Energy Corp (NAS:EXE) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

1EXE:Italy CS1:Germany

Address

6100 North Western Avenue, P.O. Box 18496, Oklahoma City, USA, 73154

Website

https://www.expandenergy.com

Expand Energy Corp independent natural gas producer in the United States. It is fueling a more affordable, reliable and lower-carbon future. The group focused on developing abundant natural gas, oil, and gas liquids to expand energy access.

Executives

Dell'osso Domenic J Jr	officer: Exec. Vice President & CFO	6100 N. WESTERN AVE., OKLAHOMA CITY OK 73118
Michael Wichterich	director	C/O EXTRACTION OIL & GAS, 370 17TH STREET, SUITE 5300, DENVER CO 80202
Joshua J. Viets	officer: EVP & COO	6100 N. WESTERN AVENUE, OKLAHOMA CITY OK 73118
Blackstone Holdings Iii L.p.	10 percent owner	C/O BLACKSTONE INC., 345 PARK AVENUE, NEW YORK NY 10154
Bx Vine Intermediate Holdco L.p.	10 percent owner	345 PARK AVENUE, NEW YORK NY 10154
Bx Vine Ml Holdco Gp L.l.c.	10 percent owner	345 PARK AVENUE, NEW YORK NY 10154
Bx Vine Ml Holdco L.p.	10 percent owner	345 PARK AVENUE, NEW YORK NY 10154
Bx Vine (pub) Aggregator L.p.	10 percent owner	345 PARK AVENUE, NEW YORK NY 10154
Brookfield Us Inc.	10 percent owner	BROOKFIELD PLACE, 250 VESEY STREET, 15TH FLOOR, NEW YORK NY 10281-1023
Bam Partners Trust	10 percent owner	181 BAY STREET, SUITE 300, TORONTO A6 M5J 2T3
Ocm Xi Chk Holdings, Llc	10 percent owner	333 S. GRAND AVE., 28TH FLOOR, LOS ANGELES CA 90071
Ocm Xb Chk Holdings, Llc	10 percent owner	333 S. GRAND AVE., 28TH FLOOR, LOS ANGELES CA 90071
Brookfield Public Securities Group Holdings Llc	10 percent owner	250 VESEY STREET, 15TH FLOOR, NEW YORK NY 10281
Gregory M. Larson	officer: VP-Accounting & Controller	6100 N. WESTERN AVENUE, OKLAHOMA CITY OK 73118
Mohit Singh	officer: EVP & CFO	6100 N. WESTERN AVENUE, OKLAHOMA CITY OK 73118