What is Osaic Financial Services Predictability Rank?
1 (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.
Osaic Financial Services 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
Osaic Financial Services Business Description
Traded in Other Exchanges
N/A
Address
4400 Biscayne Boulevard, 12th Floor, Miami, FL, USA, 33137
Osaic Financial Services Inc formerly Ladenburg Thalmann Financial Services Inc is a United States-based company that provides diversified financial services. The company conducts operations through a number of subsidiaries, with three operating segments. The independent brokerage and advisory services segment consists of broker-dealer and investment advisory services, along with wealth-management services. The Ladenburg segment comprises investment banking, sales and trading and asset management services, and investment activities. The insurance brokerage segment comprises wholesale insurance brokerage activities. The company generates the majority of revenue from the independent brokerage and advisory services segment. Its business is concentrated in the United States.
Executives
| Michael Liebowitz |
director |
4400 BISCAYNE BLVD, 10TH FLOOR, MIAMI FL 33137 |
| Vector Group Ltd |
10 percent owner |
4400 BISCAYNE BOULEVARD, 10TH FLOOR, MIAMI FL 33137 |
| Glenn C Davis |
director |
4400 BISCAYNE BOULEVARD, 12TH FLOOR, MIAMI FL 33137 |
| Joseph Giovanniello |
officer: Senior Vice President |
520 MADISON AVENUE, 9TH FLOOR, NEW YORK NY 10022 |
| Dmitry Kolosov |
director |
C/O OPKO HEALTH, INC., 4400 BISCAYNE BLVD., MIAMI FL 33137 |
| Adam Scott Malamed |
officer: Chief Operating Officer |
4400 BISCAYNE BLVD., 12TH FLOOR, MIAMI FL 33137 |
| Jacqueline M Simkin |
director |
801 BRICKELL AVENUE, SUITE 2350, MIAMI FL 33131 |
| Frost Nevada Investments Trust |
10 percent owner |
4400 BISCAYNE BOULEVARD, 15TH FLOOR, MIAMI FL 33137 |
| Brett Kaufman |
officer: Vice President and CFO |
4400 BISCAYNE BLVD., 12TH FLOOR, MIAMI FL 33137 |
| Frost Gamma Investments Trust |
10 percent owner |
4400 BISCAYNE BLVD, MIAMI FL 33137 |
| Richard M Krasno |
director |
C/O OPKO HEALTH, INC., 4400 BISCAYNE BLVD., MIAMI FL 31337 |
| Saul Gilinski |
director |
C.I. FARMACAPSULAS S.A., 1893 S.W. THIRD STREET, POMPANO BEACH FL 33069 |
| Diane Chillemi |
officer: Chief Financial Officer |
GBI CAPITAL MANAGEMENT CORP, 1055 STEWART AVE, BETHPAGE NY 11714 |
| Richard J Rosenstock |
director |
C/O GAINES BERLAND INC, 1055 STEWART AVENUE, BETHPAGE NY 11714 |
| Bruce S Mendelsohn |
officer: Managing Director & Senior EVP |
LADENBURG THALMANN FINANCIAL SERVICES, 590 MADISON AVENUE, 34TH FLOOR, NEW YORK NY 10022 |
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