Relypsa (Relypsa) Predictability Rank

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What is Relypsa 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.

Relypsa 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

Relypsa Predictability Rank Related Terms

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Relypsa (Relypsa) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Relypsa Inc (NAS:RLYP) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.relypsa.com

Relypsa Inc is a biopharmaceutical company engaged in the development and commercialization of non-absorbed polymeric drugs to treat disorders in the areas of renal, cardiovascular and metabolic diseases.

Executives

Ronald A. Krasnow	officer: See Remarks	C/O RELYPSA, INC., 700 SAGINAW DR., REDWOOD CITY CA 94063
Kristine M Ball	officer: Chief Financial Officer & SVP	C/O RELYPSA, INC., 700 SAGINAW DRIVE, REDWOOD CITY CA 94063
Mcgirr David W J	director	33 PHEASANT LANE, GREENWICH CT 06830
Paul J Hastings	director	61 HARTFORD STREET, SAN FRANCISCO CA 94114
John A Orwin	director, officer: President & CEO	C/O RELYPSA, INC., 700 SAGINAW DR., REDWOOD CITY CA 94063
Kenneth J. Hillan	director	C/O ACHAOGEN, INC., 7000 SHORELINE COURT, SUITE 371, SOUTH SAN FRANCISCO CA 94080
Wilhelm Stahl	officer: SVP, Chief Technology Officer	C/O RELYPSA, INC., 700 SAGINAW DR., REDWOOD CITY CA 94063
J. Scott Garland	officer: SVP & Chief Commercial Officer	210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080
Daniel K Spiegelman	director	MYRIAD GENETICS, 320 WAKARA WAY, SALT LAKE CITY UT 84003
John P. Butler	director	C/O RELYPSA, INC., 700 SAGINAW DR., REDWOOD CITY CA 94063
Helen Torley	director	C/O ONYX PHARMACEUTICALS, INC., 249 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080
James D Dondero	10 percent owner	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Orbimed Advisors Llc	10 percent owner	601 LEXINGTON AVENUE, 54TH FLOOR, NEW YORK NY 10022
Samuel D Isaly	10 percent owner	601 LEXINGTON AVENUE, 54TH FLOOR, NEW YORK NY 10022
Orbimed Capital Gp Iv Llc	10 percent owner	601 LEXINGTON AVENUE, 54TH FLOOR, NEW YORK NY 10022

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