What is RiverNorth Capital andome Fund 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.
RiverNorth Capital andome Fund 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
RiverNorth Capital andome Fund Business Description
Traded in Other Exchanges
Address
360 South Rosemary Avenue, Suite 1420, West Palm Beach, FL, USA, 33401
RiverNorth Capital and Income Fund is a diversified, closed-end management investment company. Its investment objective is to seek a high level of current income by investing in credit instruments, including a portfolio of securities of specialty finance and other financial companies.
Executives
| Patrick W. Galley |
director, officer: PRESIDENT |
360 S. ROSEMARY AVE, SUITE 1420, WEST PALM BEACH FL 33401 |
| Lisa Bruckert Mougin |
director |
C/O RIVERNORTH CAPITAL MANAGEMENT, LLC, 360 S. ROSEMARY AVE., SUITE 1420, WEST PALM BEACH FL 33401 |
| Janae Stanton |
other: Portfolio Manager |
360 S. ROSEMARY AVE., SUITE 1420, WEST PALM BEACH FL 33401 |
| John Wayne Hutchens |
director |
360 S. ROSEMARY AVE, SUITE 1420, WEST PALM BEACH FL 33401 |
| David Swanson |
director |
325 N. LASALLE ST., SUITE 645, CHICAGO IL 60654 |
| Jerry Raio |
director |
360 S. ROSEMARY AVE, SUITE 1420, WEST PALM BEACH FL 33401 |
| Rivernorth Capital Management, Llc |
other: Investment Adviser |
360 S. ROSEMARY AVE, SUITE 1420, WEST PALM BEACH FL 33401 |
| Brian H Schmucker |
other: OFFICER OF THE INVEST. ADVISER |
325 NORTH LASALLE STREET, SUITE 645, CHICAGO IL 60654 |
| Bartow Philip K Iii |
other: PORTFOLIO MANAGER |
325 NORTH LASALLE ST., SUITE 645, CHICAGO IL 60654 |
| John S. Oakes |
director |
325 N. LASALLE STREET, SUITE 645, CHICAGO IL 60654 |
| John K Carter |
director |
433 W. VAN BUREN STREET, SUITE 1150-E, CHICAGO IL 60607 |
| Jonathan M. Mohrhardt |
officer: CFO and Treasurer |
325 N. LASALLE STREET, SUITE 645, CHICAGO IL 60654 |
| Marcus L Collins |
officer: CCO and Secretary |
325 N. LASALLE STREET, SUITE 645, CHICAGO IL 60654 |
| Fred G Steingraber |
director |
325 N. LASALLE STREET, SUITE 645, CHICAGO IL 60654 |
| James G. Kelley |
director |
325 N. LASALLE STREET, SUITE 645, CHICAGO IL 60654 |
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