MSP (Datto Holding) Predictability Rank

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What is Datto Holding 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.

Datto Holding 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

Datto Holding Predictability Rank Related Terms

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Datto Holding Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Datto Holding Corp (NYSE:MSP) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

101 Merritt 7, Norwalk, CT, USA, 06851

Website

https://www.datto.com

Datto Holding Corp is engaged in providing cloud-based software and technology solutions. Its platform enables partners to manage and grow their businesses serving the small and medium businesses information technology, or SMB IT, market. The company's cloud-based platform offerings include Unified Continuity, Networking and Business Management software solutions.

Executives

Emily T Epstein	officer: General Counsel	101 MERRITT 7, NORWALK CT 06851
John Abbot	officer: Chief Financial Officer
Robert Raymond Petrocelli	officer: Chief Technology Officer	101 MERRITT 7 NORWALK CT 06851
Christopher Edward Mccloskey	officer: Chief Customer Officer	101 MERRITT 7 NORWALK CT 06851
Radhesh Balakrishnan Menon	officer: Chief Product Officer	101 MERRITT 7 NORWALK CT 06851
William Severance	officer: Chief Accounting Officer	44 E BROADWAY BLVD, SUITE 350, TUCSON AZ 85701
Sanjay Kumar Singh	officer: Chief Revenue Officer	101 MERRITT 7 NORWALK CT 06851
Austin Williams Mcchord	director, 10 percent owner	101 MERRITT 7 NORWALK CT 06851
Timothy Weller	director, officer: Chief Executive Officer	101 MERRITT 7 NORWALK CT 06851
Michael Glenn Fass	officer: See Remarks	101 MERRITT 7 NORWALK CT 06851
Adrian T Dillon	director	5301 STEVENS CREEK BLVD, MS 1A-LC, SANTA CLARA CA 95051
Jack K Dillon	director	101 MERRITT 7 NORWALK CT 06851
Christine E Larsen	director	C/O FIRST DATA CORPORATION, FIRST DATA, 225 LIBERTY STREET, NEW YORK NY 10281
Vff Ii Gp (cayman), Ltd.	10 percent owner	4 EMBARCADERO CENTER, 20TH FLOOR SAN FRANCISCO CA 94111
Marc Evan Brown	director	C/O RAPID7, INC., 100 SUMMER STREET, BOSTON MA 02110