Owlet (OWLT) Predictability Rank

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What is Owlet 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.

Owlet 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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Owlet Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » Owlet Inc (NYSE:OWLT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

2940 West Maple Loop Drive, Suite 203, Lehi, UT, USA, 84043

Website

https://www.owletcare.com

Owlet Inc is engaged in providing a digital parenting platform that aims to give parents real-time data and insights to help parents feel more calm and confident. Its diversified portfolio of products includes Owlet Smart Sock, the first baby monitor to track an infant's oxygen levels, heart rate, and sleep trends; the Owlet Cam, which turns any smartphone into a baby monitor with high-definition clarity; the Owlet Monitor Duo, which offers the intelligence of the Owlet Smart Sock paired with the Owlet Cam; and Owlet Dream Lab, an interactive online program designed to be a parent's guide to building healthy sleep habits for their infants.

Executives

Jonathan Harris	officer: President & CRO	3000 CLEARVIEW WAY, SAN MATEO CA 94402
Kurt Workman	director, officer: Chief Executive Officer	C/O OWLET, INC., 2500 EXECUTIVE PARKWAY, SUITE 500, LEHI UT 84043
Kathryn R. Scolnick	officer: Chief Financial Officer	3300 N ASHTON BLVD, STE 300, LEHI UT 84043
Marc F Stoll	director	C/O ARISTA NETWORKS, INC., 5453 GREAT AMERICA PARKWAY, SANTA CLARA CA 95054
Melissa Gonzales	director	C/O OWLET, INC., 3300 NORTH ASHTON BOULEVARD, SUITE 300, LEHI UT 84043
Jason Knafel	director	514 HIGH STREET, PALO ALTO CA 94301
Eclipse Early Growth Fund I, L.p.	10 percent owner	514 HIGH STREET, SUITE 4, PALO ALTO CA 94301
Eclipse Early Growth Gp I, Llc	10 percent owner	514 HIGH STREET, SUITE 4, PALO ALTO CA 94301
Trilogy Equity Partners, Llc	10 percent owner	155 108TH AVE NE, SUITE 400, BELLEVUE WA 98004
Michael P. Abbott	director, officer: President	C/O OWLET, INC., 2500 EXECUTIVE PARKWAY, SUITE 500, LEHI UT 84043
Nathaniel Yoo	officer: Chief Accounting Officer	C/O OWLET, INC., 2500 EXECUTIVE PARKWAY, SUITE 500, LEHI UT 84043
Eclipse Continuity Fund I, L.p.	10 percent owner	514 HIGH STREET, SUITE 4, PALO ALTO CA 94301
Zane M Burke	director	C/O LIVONGO HEALTH, INC., 150 WEST EVELYN AVENUE, SUITE 150, MOUNTAIN VIEW CA 94041
John C. Kim	director	C/O OWLET, INC., 2500 EXECUTIVE PARKWAY, SUITE 500, LEHI UT 84043
Amy Nam Mccullough	director	C/O OWLET, INC., 2500 EXECUTIVE PARKWAY, SUITE 500, LEHI UT 84043