Noranda Aluminum Holding (Noranda Aluminum Holding) Predictability Rank

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What is Noranda Aluminum 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.

Noranda Aluminum 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

Noranda Aluminum Holding Predictability Rank Related Terms

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Noranda Aluminum Holding (Noranda Aluminum Holding) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Noranda Aluminum Holding Corp (OTCPK:NORNQ) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

801 Crescent Centre Drive, Suite 600, Franklin, TN, USA, 37067

Website

http://www.norandaaluminum.com

Noranda Aluminum Holding Corporation is an integrated producer of value-added primary aluminum products and rolled aluminum coils. The company's downstream business is one of the largest aluminum foil producers in North America. Its upstream business is a large producer of primary aluminum in the U.S.

Executives

Richard B Evans	director	C/O BOATWATER INC, 55 EAST CAMPERDOWN WAY, GREENVILLE SC 29601
Ronald S Rolfe	director	825 8TH AVENUE, 38TH FLOOR, NEW YORK NY 10019
Carl J Rickertsen	director	MICROSTRATEGY INCORPORATED, 1850 TOWERS CRESCENT PLAZA, TYSONS CORNER VA 22182
Alan H Schumacher	director	C/O QUALITY DISTRIBUTION, INC., 4041 PARK OAKS BOULEVARD, SUITE 200, TAMPA FL 33610
Gail E Lehman	officer: Gen Counsel/Sec/Chief Adm Off	801 CRESCENT CENTRE DRIVE, SUITE 600, FRANKLIN TN 37067
Thomas R Miklich	director	C/O OM GROUP INC 50 PACIFIC SQUARE #3500 CLEVELAND OH 44113
Dale W Boyles	officer: Chief Financial Officer	1000 EAST HANES MILL ROAD, WINSTON-SALEM NC 27105
Pasquale Fiore	director	201 ISABELLA STREET, SUITE 500, PITTSBURGH PA 15212
Apollo Principal Holdings I Gp, Llc	10 percent owner	TWO MANHATTANVILLE ROAD, SUITE 203, PURCHASE NY 10577
Apollo Investment Fund Vi L P	10 percent owner	2 MANHATTAVILLE RD, PURCHASE NY 10577
Apollo International Management Gp, Llc	10 percent owner	9 WEST 57TH STREET, NEW YORK NY 10019
Apollo International Management, L.p.	10 percent owner	9 WEST 57TH STREET, NEW YORK NY 10019
Apollo Management Vi, L.p.	10 percent owner	9 WEST 57TH STREET, 43RD FLOOR, NEW YORK NY 10019
Aif Vi Management, Llc	10 percent owner	9 WEST 57TH STREET, 43RD FLOOR, NEW YORK NY 10019
Apollo Management Gp, Llc	10 percent owner	TWO MANHATTANVILLE ROAD, SUITE 203, PURCHASE NY 10577

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