What is Performant Healthcare Predictability Rank?
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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.
Performant Healthcare 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
Performant Healthcare Business Description
Traded in Other Exchanges
N/A
Address
900 South Pine Island Road, Suite 150, Plantation, FL, USA, 33324
Performant Healthcare Inc provides solutions to payers in the healthcare industry to identify, prevent, and recover waste and improper payments by leveraging technology, analytics, and proprietary data assets.
Executives
| Lisa Im |
officer: Chief Executive Officer |
C/O PERFORMANT FINANCIAL CORPORATION, 333 NORTH CANYONS PARKWAY, LIVERMORE CA 94551 |
| Prescott Group Capital Management, L.l.c. |
10 percent owner |
1924 SOUTH UTICA, SUITE 1120, TULSA OK 74104-6429 |
| Rohit Ramchandani |
officer: Chief Financial Officer |
333 NORTH CANYONS PARKWAY, LIVERMORE CA 94551 |
| Ecmc Group, Inc. |
10 percent owner |
1 IMATION PLACE, BLDG 2, SUITE 392A, OAKDALE MN 55128 |
| Parthenon Dcs Holdings, Llc |
10 percent owner |
C/O PARTHENON CAPITAL PARTNERS, FOUR EMBARCADERO CENTER, SAN FRANCISCO CA 94111 |
| Pcp Managers Gp, Llc |
10 percent owner |
FOUR EMBARCADERO CENTER, SUITE 3610, SAN FRANCISCO CA 94111 |
| Eric Yanagi |
director |
400 OYSTER POINT BOULEVARD, SUITE 526, SOUTH SAN FRANCISCO CA 94080 |
| Parthenon Investors Ii. L.p. |
10 percent owner |
C/O PARTHENON CAPITAL PARTNERS, 400 EMBARCADERO CENTER, SAN FRANCISCO CA 94111 |
| Pcap Partners Ii, Llc |
10 percent owner |
C/O PARTHENON CAPITAL PARTNERS, FOUR EMBARCADERO CENTER, SAN FRANCISCO CA 94111 |
| Pcap Ii, Llc |
10 percent owner |
C/O PARTHENON CAPITAL PARTNERS, FOUR EMBARCADERO CENTER, SAN FRANCISCO CA 94111 |
| Pcp Managers, L.p. |
10 percent owner |
C/O PARTHENON CAPITAL PARTNERS, FOUR EMBARCADERO CENTER, SUITE 3610, SAN FRANCISCO CA 94111 |
| James Lacamp |
director |
333 NORTH CANYONS PARKWAY, LIVERMORE CA 94551 |
| Prescott Group Aggressive Small Cap Master Fund Gp |
10 percent owner |
1924 S UTICA SUITE # 1120, TULSA OK 74104-6529 |
| Prescott Group Aggressive Small Cap Ii Lp |
10 percent owner |
1924 S UTICA SUITE # 1120, TULSA OK 74104-6529 |
| Prescott Group Aggressive Small Cap Lp |
10 percent owner |
1924 SOUTH IRICA SUITE 1120, TULSA OK 741046529 |
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