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Ironstone Group (Ironstone Group) Predictability Rank


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What is Ironstone Group 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.

Ironstone Group 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Ironstone Group Predictability Rank Related Terms

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Ironstone Group (Ironstone Group) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Industrials » Conglomerates » Ironstone Group Inc (OTCPK:IRNS) » Definitions » Predictability Rank
Comparable Companies
VIVC EFSH GTLL IGC KDCE PTEEF SPGX CIRX HON MMM ADX:ALPHADHABI TSE:6501 TSE:8058 TSE:8001 TSE:8031 HKSE:00267 HKSE:00001 IEP TSE:8053 TSE:8002
Traded in Other Exchanges
N/A
Address
909 Montgomery Street, 3rd Floor, San Francisco, CA, USA, 94133
Website
http://www.ironstonegroupinc.com
Ironstone Group Inc is engaged in funding and growing disruptive businesses.
Executives
Harold S Bradley director 11613 PAWNEE LANE, LEAWOOD KS 66211
Eugene Yates officer: CFO 8 NAVAJO CT, ALAMO CA 94507
Thomas Thurston director 909 MONTGOMERY STREET, 3RD FLOOR, SAN FRANCISCO CA 94133
Elizabeth Boyer Hambrecht officer: CFO 1356 GREENWICH STREET, SAN FRANCISCO CA 94109
William R Hambrecht director, 10 percent owner C/O ADOBE SUSTEMS INC, 345 PARK AVENUE P O BOX 2704, SAN JOSE CA 95110-2704
Hambrecht 1980 Revocable Trust 10 percent owner
Venture Associates Bvi Ltd 10 percent owner ONE BUSH ST, SAN FRANCISCO CA 94104
Amquist 10 percent owner ONE BUSH ST, SAN FRANCISCO CA 94104
H&q Ventures Iv 10 percent owner ONE BUSH STREET, SAN FRANCISCO CA 94104
Hambrecht & Quist California 10 percent owner ONE BUSH ST, SAN FRANCISCO CA 94104
J P Morgan Securities Inc 10 percent owner
Hambrecht & Quist Venture Partners 10 percent owner ONE BUSH STREET, SAN FRANCISCO CA 94104
Nicholas J Giordano director, officer: CEO/CFO 539 BRYANT ST, SUITE 100, SAN FRANCISCO CA 94107

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