What is Triple-S Management 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.
Triple-S Management 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
Triple-S Management (Triple-S Management) Business Description
Traded in Other Exchanges
N/A
Address
1441 F.D. Roosevelt Avenue, San Juan, PRI, 00920
Triple-S Management Corp is a diversified insurance provider that operates in Puerto Rico. The company operates three segments including Managed Care, Life insurance; and Property and casualty insurance. It generates the vast majority of its revenue through premiums earned from the sale of managed care products to the Commercial, Medicare Advantage, and Medicaid sectors. Triple-S generally receives revenues from premiums, administrative service fees, and investment income.
Executives
| Arturo Carrion |
officer: President, Triple-S Vida, Inc. |
PO BOX 363628 SAN JUAN PR 00936-3628 |
| Juan R Serrano |
officer: Chief Strategy & HCD Officer |
PO BOX 363628 SAN JUAN PR 00936 |
| Stephen Ondra |
director |
150 ALLEN ROAD, SUITE 201, BASKING RIDGE NJ 07920 |
| Joseph A. Frick |
director |
ONE COMMERCE SQUARE 2005 MARKET ST., SUITE 3300 19103 PR 19073 |
| Chafey David H Jr |
director |
P O BOX 362708, SAN JUAN PR 936-2708 |
| Gail Boxer Marcus |
director |
201 INDUSTRIAL ROAD, SUITE 410, SAN CARLOS CA 94070 |
| Manuel Figueroa |
director |
P.O. BOX 363628 SAN JUAN PR 00936-3628 |
| Luis A Clavell |
director |
PO BOX 363628 SAN JUAN PR 00936-3628 |
| Cari M Dominguez |
director |
MANPOWERGROUP INC., 100 MANPOWER PLACE, MILWAUKEE WI 53212 |
| Maria-ros Roberto Santa |
director |
1441 F.D. ROOSEVELT AVE 6TH FLOOR SAN JUAN PR 00936 |
| Ilia Rodriguez |
officer: Chief Human Resources Officer |
1441 F.D. ROOSEVELT AVE., 6TH FLOOR SAN JUAN PR 00836 |
| Pedro Aponte |
officer: Chief Information Officer |
1441 F.D ROOSEVELT AVENUE, 6TH FLOOR SAN JUAN PR 00936 |
| Ivelisse Fernandez |
officer: CMCO |
1441 F.D. ROOSEVELT AVE., 6TH FLOOR SAN JUAN PR 00936 |
| Del Amo Mojica Jose |
officer: President, TSP and TIA |
1441 F.D. ROOSEVELT AVE., 6TH FLOOR SAN JUAN PR 00936 |
| Jose E. Novoa-loyola |
officer: Chief Medical Officer |
1441 F.D ROOSEVELT AVE. 6TH FLOOR SAN JUAN PR 00936 |
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