What is Modular Medical 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.
Modular Medical 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
Modular Medical Business Description
Traded in Other Exchanges
N/A
Address
10470 Thornmint Road, San Diego, CA, USA, 92127
Modular Medical Inc is a development stage medical device company which focuses on the design, development, and commercialization of insulin pumps using modernized technology to increase pump adoption in the diabetes marketplace. The company's products seek to serve both the type 1 and the rapidly growing, especially in terms of device adoption, type 2 diabetes markets.
Executives
| Manchester Management Co Llc |
10 percent owner |
3 WEST HILL PLACE, BOSTON MA 02110 |
| Philip Brent Sheibley |
director |
C/O MODULAR MEDICAL, INC., 16772 W. BERNARDO DRIVE, SAN DIEGO CA 92127 |
| Jeb Partners, L.p. |
other: Director by Deputization |
MANCHESTER MANAGEMENT COMPANY, L.L.C, 3 WEST HILL PLACE, BOSTON MA 02114 |
| Kevin Schmid |
officer: Chief Operating Officer |
8 EAGLES NEST LANE, BEDFORD MA 01921 |
| Paul Diperna |
director, 10 percent owner, officer: See Remarks |
16772 W BERNARDO DRIVE, RANCHO BERNARDO CA 92127 |
| Carmen B Volkart |
director |
C/O MODULAR MEDICAL, INC., 16772 WEST BERNARDO DRIVE, SAN DIEGO CA 92127 |
| Duane M Desisto |
director |
INSULET CORPORATION, 9 OAK PARK DRIVE, BEDFORD MA 01730 |
| Ellen O'connor Vos |
director |
C/O NTELOS HOLDINGS CORP., 1154 SHENANDOAH VILLAGE DRIVE, WAYNESBORO VA 22980 |
| Steven G Felsher |
director |
C/O SITO MOBILE, LTD.,, 100 TOWN SQUARE PLACE, STE 204, JERSEY CITY NJ 07310 |
| Morgan C. Frank |
10 percent owner |
2 CALLE NAIRN, UNIT 701, SAN JUAN PR 00907 |
| Paul Diperna Irrevocable Trust |
other: See Footnote(1) |
16772 WEST BERNARDO DRIVE, SAN DIEGO CA 92127 |
| Stephen Edward Daly |
officer: Chief Commercial Officer |
2090 DIPINTO ROAD, HENDERSON NV 89052 |
| William J Febbo |
director |
600 CALIFORNIA ST., 9TH FLOOR, SAN FRANCISCO CA 94108 |
| Liam Burns |
director |
C/O MODULAR MEDICAL, INC., 800 W. VALLEY PARKWAY, SUITE 203, ESCONDIDO CA 92025 |
| James E Besser |
10 percent owner |
3 WEST HILL PLACE, BOSTON MA 02114 |
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