Fidelity & Guaranty Life (Fidelity & Guaranty Life) Predictability Rank

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What is Fidelity & Guaranty Life Predictability Rank?

Not Rated

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.

Fidelity & Guaranty Life 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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Fidelity & Guaranty Life (Fidelity & Guaranty Life) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Fidelity & Guaranty Life (NYSE:FGL) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

https://home.fglife.com

Fidelity & Guaranty Life was incorporated in Delaware. Fidelity and Guaranty Life is engaged in selling of individual life insurance products and annuities through independent agents, managing general agents, and specialty brokerage firms and in selected institutional markets. Its products include FG Life-Elite and FG Life-Choice.

Executives

Christopher J Littlefield	director, officer: Chief Executive Officer	TWO RUAN CENTER, 601 LOCUST STREET, 14TH FLOOR, DES MOINES IA 50309
Dennis Robert Vigneau	officer: EVP and Chief Financial Off	UNKNOWN, UNKNOWN IL 60601
Andrew A. Mcknight	director	ONE MARKET PLAZA, SPEAR TOWER 42ND FLOOR, SAN FRANCISCO CA 94123
Currier John David Jr.	officer: SVP, Chief Actuary	601 LOCUST STREET, 14TH FLOOR, DES MOINES IA 50309
Launer Leland C Jr	director, officer: Chief Executive Officer
Joseph S Steinberg	director	C/O LEUCADIA NATIONAL CORP, 315 PARK AVENUE SOUTH, NEW YORK NY 10010
Omar Asali	director	GOLDMAN SACHS HEDGE FUND STRATEGIES LLC, 32 OLD SLIP, 9TH FLOOR, NEW YORK NY 10005
Thomas A. Williams	director	450 PARK AVENUE, 27TH FLOOR, NEW YORK NY 10022
Cobb Clyde Landon Jr.	officer: Chief Accounting Officer	1001 FLEET STREET, 6TH FLOOR, BALTIMORE MD 21202
Phillip J. Gass	director, other: Chairman	C/O NASSAU ASSET MANAGEMENT LLC, 1 AMERICAN ROW, HARTFORD CT 06102
Philip Falcone	other: *See Remarks	450 PARK AVENUE, 30TH FLOOR, NEW YORK NY 10022
Harbinger Group Inc.	10 percent owner	3001 DEMING WAY, MIDDLETON WI 53562

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