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Seaboard (Seaboard) Predictability Rank


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What is Seaboard Predictability Rank?

1 (5)

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.


Seaboard 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Seaboard Predictability Rank Related Terms

Thank you for viewing the detailed overview of Seaboard's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.


Seaboard (Seaboard) Business Description

Traded in Other Exchanges
Address
9000 West 67th Street, Merriam, KS, USA, 66202
Seaboard Corp is a diversified group of companies that operate in agricultural and ocean transport businesses. The company is engaged in hog production and pork processing in the United States; commodity trading and grain processing in Africa and South America; cargo shipping services in the U.S., Caribbean and Central and South America; sugar and alcohol production in Argentina; and electric power generation in the Dominican Republic. It also has an equity method investment in Butterball, LLC, a producer and processor of turkey products. The group operates six business segments: pork, commodity trading and milling, marine, sugar and alcohol, power, and turkey. It operates in 45 countries, with a concentration in the U.S. and countries in Central and South America and Africa.
Executives
Cerezo Baena Laura P officer: Assistant Secretary 9000 W 67TH STREET, SHAWNEE MISSION KS 66202
Barbara M Smith officer: Interim Controller and PAO 9000 W 67TH STREET, MERRIAM KS 66202
Frances B Shifman director 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
Vacas Jacques Emma Alejandra officer: Assistant Treasurer 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
James T Hubler officer: Assoc. Gen Counsel & Asst. Sec 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
Benjamin R Hodes officer: Vice President, Finance 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
Elizabeth A Loudon officer: Vice President, Tax 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
John B Warner officer: Vice President-Human Resources 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
Adriana N Hoskins officer: Vice President and Treasurer 9000 WEST 67TH STREET, MERRIAM KS 66202
Peter B Brown officer: Pres. & CEO, Seaboard Foods 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
Jacob A. Bresky officer: Vice Pres-Business Development 9000 WEST 67TH STREET, 3RD FLOOR, SHAWNEE MISSION KS 66202
Ellen S. Bresky director, 10 percent owner 9000 WEST 67TH STREET, 3RD FLOOR, SHAWNEE MISSION KS 66202
Douglas W Baena director
Darwin E Sand officer: Pres. & CEO, Seaboard Foods 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202
Winfield Ivan J. Jr officer: VP-Information Technology 9000 WEST 67TH STREET, SHAWNEE MISSION KS 66202

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