What is New England Realty Associates LP Predictability Rank?
5 (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.
New England Realty Associates LP 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
New England Realty Associates LP Business Description
Traded in Other Exchanges
N/A
Address
39 Brighton Avenue, Allston, MA, USA, 02134
New England Realty Associates LP is engaged in the business of acquiring, developing, holding for investment, operating and selling real estate. The Partnership owns and operates various residential apartments, condominium units and commercial properties located in Massachusetts and New Hampshire. The company generates revenue from rental income from residential and commercial properties recognized over the term of the related lease. The long-term goals of the Partnership are to manage, rent and improve its properties and to acquire additional properties with income and capital appreciation potential as suitable opportunities arise.
Executives
| Jameson Pruitt Brown |
director, officer: Treasurer |
NEW ENGLAND REALTY ASSOCIATES LP, 39 BRIGHTON AVENUE, ALLSTON MA 02360 |
| Ronald Brown |
officer: President |
NEW ENGLAND REALTY ASSOCIATES LP, 39 BRIGHTON AVENUE, ALLSTON MA 02134 |
| Carl Anthony Valeri |
other: 5% Owner, Asset Manager |
50 UDINE STREET, ARLINGTON MA 02476 |
| Harold Brown |
director, 10 percent owner, officer: Treas. & Dir. of Gen. Ptnr NEN |
39 BRIGHTON AVE, ALLSTON MA 02134 |
| 1999 Revocable Trust |
10 percent owner |
C/O NEW ENGLAND REALTY ASSOCIATES LP, 39 BRIGHTON AVENUE, ALLSTON MA 02025 |
| Nera 1994 Irrevocable Trust |
10 percent owner, officer: Treasurer |
C/O LANE AITMAN & OWENS, 101 FEDERAL STREET, BOSTON MA 02110 |
| David R Jarvis |
10 percent owner |
C/O MERCURY REAL ESTATE ADVISORS LLC, 100 FIELD POINT ROAD, GREENWICH CT 06830 |
| Mercury Real Estate Securities Offshore Fund, Ltd. |
10 percent owner |
100 FIELD POINT ROAD, GREENWICH CT 06830 |
| Silvercreek Sav Llc |
10 percent owner |
C/O MERCURY REAL ESTATE ADVISORS LLC, 100 FIELD POINT ROAD, GREENWICH CT 06830 |
| Mercury Special Situations Offshore Fund Ltd |
10 percent owner |
P O BOX 3460 RD TOWN, TORTOLA BVI E9 00000 |
| Maclean Malcolm F Iv |
10 percent owner |
C/O ASPEN GROUP, INC., 1660 SOUTH ALBION STREET, SUITE 525, DENVER CO 80222 |
| Mercury Real Estate Securities Fund Lp |
10 percent owner |
100 FIELD POINT ROAD, GREENWICH CT 06830 |
| Mercury Mayfair Llc |
10 percent owner |
100 FIELD POINT ROAD, FIRST FLOOR, GREENWICH CT 06830 |
| Mercury Special Situations Fund L P |
10 percent owner |
100 FIELD POINT RD, GREENWICH CT 06830 |
| Mercury Securities Ii Llc |
10 percent owner |
100 FIELD POINT ROAD, FIRST FLOOR, GREENWICH CT 06830 |
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