What is 1st Constitution Bancorp Predictability Rank?
4.5 (5)
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.
1st Constitution 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
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
1st Constitution Bancorp (1st Constitution Bancorp) Business Description
Traded in Other Exchanges
N/A
Address
2650 Route 130, P.O. Box 634, Cranbury, NJ, USA, 08512
1st Constitution Bancorp is a United States-based bank holding company. Through its subsidiaries, it provides commercial and retail banking. It mainly provides its services to individuals, families, institutions, and small businesses in central and coastal New Jersey and the Fort Lee area of Bergen County. Its loan portfolio segment includes residential real estate loans, home equity loans, and other loans to individuals. It operates in a single segment, which is Community Banking.
Executives
| Crow Charles S Iii |
director |
|
| Naqi A Naqvi |
officer: Senior VP and CAO |
23 GREEN RIDGE MANALAPAN NJ 07726 |
| John T Andreacio |
officer: Chief Lending Officer and EVP |
KNBT BANCORP, INC. 90 HIGHLAND AVENUE BETHLEHEM PA 18017 |
| Stephen J Gilhooly |
officer: SVP, CFO and Treasurer |
1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| Carmen M Penta |
director |
C/O 1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| Edwin J Pisani |
director |
C/O 1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| William M Rue |
director |
40 WANTAGE AVE, BRANCHVILLE NJ 07890 |
| William James Barrett |
director |
C/O 1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| Roy D Tartaglia |
director |
C/O 1ST CONSTITUTION BANK 2650 ROUTE 130 CRANBURY NJ 08512 |
| James G Aaron |
director |
C/O 1ST CONSTITUTION BANK 2650 ROUTE 130 CRANBURY NJ 08512 |
| J. Lynne Cannon |
director |
1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| Antonio L. Cruz |
director |
1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| Raymond R. Ciccone |
director |
C/O 1ST CONSTITUTION BANCORP 2650 ROUTE 130 CRANBURY NJ 08512 |
| Robert F Mangano |
director, officer: President and CEO |
C/O 1ST CONSTITUTION BANCORP, 2650 ROUTE 130, CRANBURY NJ 08512 |
| Walsh Frank E. Iii |
director |
330 SOUTH STREET, SUITE 4, MORRISTOWN NJ 07960 |
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