Holley (Holley) Predictability Rank

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What is Holley 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.

Holley 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

Holley Predictability Rank Related Terms

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Holley (Holley) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Vehicles & Parts » Holley Inc (NYSE:HLLY) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

82Z:Germany

Address

1801 Russellville Road, Bowling Green, KY, USA, 42101

Website

https://www.holley.com

Holley Inc is a designer, marketer, and manufacturer of high-performance automotive aftermarket products, featuring a portfolio of iconic brands serving the car and truck industry. It offers a diversified line of performance automotive products including fuel injection systems, tuners, exhaust products, carburetors, safety equipment and various other performance automotive products. The company's brands include Holley, APR, MSD and Flowmaster, among others. It derives revenue from the U.S. and Italy, of which prime revenue is derived from the U.S.

Executives

Matthew Stevenson	director, officer: President and CEO	150 PEABODY PLACE, M.S. LEGL-0008, MEMPHIS TN 38103
Ginger M Jones	director	55 JEWELERS PARK DRIVE, NEENAH WI 54956
James D. Coady	director, 10 percent owner	C/O SENTINEL CAPITAL PARTNERS, L.L.C., 330 MADISON AVENUE, 27TH FLOOR, NEW YORK CITY NY 10017
Owen Basham	director, 10 percent owner	C/O SENTINEL CAPITAL PARTNERS, L.L.C., 330 MADISON AVENUE, 27TH FLOOR, NEW YORK NY 10017
David S Lobel	director, 10 percent owner	C/O SENTINEL CAPITAL PARTNERS II, 777 THIRD AVE. 32ND FL, NEW YORK NY 10017
Midocean Partners V, L.p.	10 percent owner	C/O MIDOCEAN PARTNERS, 320 PARK AVENUE, SUITE 1600, NEW YORK NY 10022
Graham Clempson	director, officer: President and Director	C/O MIDOCEAN PARTNERS, 245 PARK AVENUE, 38TH FLOOR, NEW YORK NY 10167
Jesse Weaver	officer: Chief Financial Officer	1801 RUSSELLVILLE ROAD, BOWLING GREEN KY 42101
Brian Appelgate	officer: Interm Chief Operating Officer	1801 RUSSELLVILLE ROAD, BOWLING GREEN KY 42101
Dominic Bardos	officer: Chief Financial Officer	1801 RUSSELLVILLE RD, BOWLING GREEN KY 42101
Thomas W Tomlinson	director, officer: Chief Executive Officer	1801 RUSSELLVILLE RD, BOWLING GREEN KY 42101
Anita Sehgal	director	817 MAXWELL AVENUE, EVANSVILLE IN 47711
Carly Kennedy	officer: EVP & General Counsel	1801 RUSSELLVILLE ROAD, BOWLING GREEN KY 42101
Matthew E Rubel	director	3231 SE SIXTH AVENUE, TOPEKA KS 66607
Gina L Bianchini	director	312 WALNUT STREET, SUITE 1800, CINCINNATI OH 45202