RespireRx Pharmaceuticals (RespireRx Pharmaceuticals) Predictability Rank

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What is RespireRx Pharmaceuticals 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.

RespireRx Pharmaceuticals 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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RespireRx Pharmaceuticals (RespireRx Pharmaceuticals) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » RespireRx Pharmaceuticals Inc (OTCPK:RSPI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

126 Valley Road, Suite C, Glen Rock, NJ, USA, 07452

Website

http://www.respirerx.com

RespireRx Pharmaceuticals Inc is engaged in the discovery, development, and commercialization of pharmaceuticals for the treatment of neurological and psychiatric disorders. The pipeline products of the company are dronabinol which is developed for the treatment of OSA (Obstructive Sleep Apnea), a form of sleep apnea; CX1739 for the treatment of chronic central sleep apnea; CX717 and CX1942 is an injectable dosage for respiratory depression or vaso-occlusive passes associated with sickle cell disease. The company also focuses on developing another class of compounds called ampakines for the treatment of various respiratory disorders.

Executives

David Dickason	officer: SVP of Pre-Clinical Prod. Dev.	126 VALLEY ROAD, SUITE C, GLEN ROCK NJ 07452
Timothy L. Jones	director, officer: CEO and President	126 VALLEY ROAD, SUITE C, GLEN ROCK NJ 07452
Manuso James S J	director, officer: President & CEO	5130 ROUTE 212, WILLOW NY 12495
Katie Macfarlane	director	101 POOR FARM ROAD 3RD FLOOR, PRINCETON NJ 08540
Purcell Richard David Jr.	officer: SVP - Research & Deleopment	65 FAIR HAVEN ROAD, FAIR HAVEN NJ 07704
James Sapirstein	director	1517 SAN JACINTO, HOUSTON TX 77002
Marc M Radin	officer: Controller	33 FRANKLIN PLACE, GLEN ROCK NJ 07452
Robert N Weingarten	director, officer: Vice President and CFO	5439 LOCKHURST DRIVE, WOODLAND HILLS CA 91367
Aurora Capital Llc	other: Member of a 10% owner group	354 WIDOW GAVITS ROAD, PO BOX 1167, BRIDGEHAMPTON, NY 11932-1167
Aurora Capital Corp	other: Member of 10% owner group
Jeff Eliot Margolis	director, officer: Vice President, Sec. & Treas., other: Member of 10% owner group	C/O AURORA CAPITAL LLC, 17 PARK AVENUE, #201, NEW YORK NY 10016
Steven Chizzik	other: Member of 10% owner group	C/O THE VERRAZANO GROUP, LLC, 2204 MORRIS AVENUE, SUITE 203A, UNION NJ 07083
Arnold Lippa	director, officer: Chairman, CEO and President, other: Member of 10% owner group	C/O AURORA CAPITAL, LLC, 17 PARK AVENUE, #201, NEW YORK NY 10016
T. Morgen Capital Llc	other: Member of 10% owner group	C/O AURORA CAPITAL LLC, 17 PARK AVENUE, #201, NEW YORK NY 10016
Kenneth M Cohen	other: Member of 10% owner group	12750 HIGH BLUFF DRIVE, SUITE 310, SAN DIEGO CA 92130