RXNRQ.PFD (Rex Energy) Predictability Rank

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What is Rex Energy 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.

Rex Energy 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

Rex Energy Predictability Rank Related Terms

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Rex Energy Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Rex Energy Corp (OTCPK:RXNRQ.PFD) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

366 Walker Drive, State College, PA, USA, 16801

Website

http://www.rexenergy.com

Rex Energy Corp is a US-based independent condensate, NGL (Natural Gas Liquids) and natural gas company operating in the Appalachian Basin. The company focuses on natural gas and natural gas liquids production as well as on drilling and exploration activities in the Marcellus Shale, Utica Shale, and Upper Devonian Shale. The exploration properties of the company include the Appalachian Basin which includes the states of Kentucky, Maryland, New York, Ohio, Pennsylvania, Virginia, West Virginia and Tennessee.

Executives

Robert W Ovitz	officer: Chief Operating Officer	366 WALKER DRIVE, STATE COLLEGE PA 16801
Jack N Aydin	director	6 DEFOREST CORT, W. NYACK NY 10094
Thomas Rajan	officer: CFO	366 WALKER DRIVE, STATE COLLEGE PA 16801
Todd N. Tipton	director	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
Michael L Hodges	officer: CFO	C/O GULFPORT ENERGY CORP, 713 MARKET DR, OKLAHOMA CITY OK 73114
Curtis J Walker	officer: Chief Accounting Officer	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
F Scott Hodges	officer: Sr. VP, Land	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
Christina K Marshall	officer: Sr. VP, HR & Admin.	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
Jennifer L Mcdonough	officer: VP, General Counsel and Secr.	C/O NORDSON CORPORATION, 28601 CLEMENS ROAD, WESTLAKE OH 44145
David E Pratt	officer: Sr. VP of Exploration	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
John J Zak	director	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
Patrick M Mckinney	officer: Exec. VP and COO	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
Eric L Mattson	director	C/O REX ENERGY CORP, 366 WALKER DRIVE, STATE COLLEGE PA 16801
Timothy Paul Beattie	officer: S VP & Appalachian Dist Man	REX ENERGY CORPORATION, 476 ROLLING RIDGE DRIVE, SUITE 300, STATE COLLEGE PA 16801
Bryan James Clayton	officer: Vice President & Ill Dist Man	C/O REX ENERGY CORPORATION, 476 ROLLING RIDGE DRIVE, STATE COLLEGE PA 16801