NETSOL Technologies (NETSOL Technologies) Predictability Rank

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What is NETSOL Technologies Predictability Rank?

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.

NETSOL Technologies 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

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NETSOL Technologies (NETSOL Technologies) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » NETSOL Technologies Inc (NAS:NTWK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

16000 Ventura Blvd, Suite 770, Encino, CA, USA, 91436

Website

https://www.netsoltech.com

NETSOL Technologies Inc is involved in providing information technology and enterprise software solutions. Its products and services include NFS Ascent, NFS Digital, Leasepak Cloud, Business consultancy, and information security services among others. The firm has North America, Europe, and Asia-Pacific segments, of which the majority of the revenue is derived from Asia-Pacific. It derives revenue from licensing, customization, enhancements, and maintenance of its financial applications. The company promotes and sells its products under the Netsol financial suite.

Executives

Naeem Ghaur	director, 10 percent owner, officer: CEO	23901CALABASAS ROAD, SUITE 2072, CALABASAS CA 91302
Najeeb Ghauri	director, officer: CFO, Chairman	24025, CALABASAS CA 91302
Michael Richard Francis	director	C/O NETSOL TECHNOLOGIES, INC., 16000 VENTURA BLVD., SUITE 770, ENCINO CA 91436
Roger Kent Almond	officer: CFO	C/O NETSOL TECHNOLOGIES, INC., 24025 PARK SORRENTO, SUITE 410, CALABASAS CA 91302
Henry Arnolfo Tolentino	director	C/O NETSOL TECHNOLOGIES, INC., 23975 PARK SORRENTO, STE 250, CALABASAS CA 91302
Malea Farsai	director	23901 CALABASAS ROAD, SUITE 2072, CALABASAS CA 91302
Syed Kausar Kazmi	director	C/O.NETSOL TECHNOLOGIES.INC., 23975 PARK SORRENTO, SUITE 250, CALABASAS CA 91302
Mark Caton	director	P O BO 270052, SAN DIEGO CA 92198
Eugen Beckert	director	24025 PARK SORRENTO, SUITE 410, CALABASAS CA 91302
Shahid Burki	director	11112 STACKHOUSE CT, POTOMAC MD 20854
Mcglasson Patti L W	officer: Secretary	23901 CALABASAS RD STE 2072, CALABASAS CA 91302
Asad Ullah Ghauri	director	24025 PARK SORRENTO, SUITE 410, C/O NETSOL TECHNOLOGIES, INC., CALABASAS CA 91302
Jeffrey M Bilbrey	director	C/O NETSOL TECHNOLOGIES, INC., 24025 PARK SORRENTO, SUITE 410, CALABASAS CA 91302
Salim U Ghauri	director, 10 percent owner, officer: President	24011 VENTURA BLVD #101, CALABASAS CA 91302
Alexander Shakow	director	NETSOL TECHNOLOGIES INC, 23901 CALABASAS ROAD STE 2072, CALABASAS CA 91032