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Brainy Brands Co (Brainy Brands Co) Predictability Rank


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What is Brainy Brands Co 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.

Brainy Brands Co 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

Brainy Brands Co Predictability Rank Related Terms

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

Brainy Brands Co (Brainy Brands Co) Business Description

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Brainy Brands Company Inc. was incorporated under the laws of the State of Delaware on November 21, 2007 and began activity in 2008.Previously, it was known as Enter Corp. The proposed business plan of the Company is to use innovative agricultural technology and know-how to grow vegetables and other crops, initially in the former Soviet Republic of Georgia, and later in other selected locations. The Company is in the development stage and has yet to realize revenues from operations. It intends to locate a local, joint venture partner to co-invest with them in its pilot project on a 30-hectare plot of land. If it does not locate a local, joint venture partner but do raise funds, it will execute the Pilot Project on its own. It initially intended to conduct a pilot project at a suitable location, which it has found in the town of Natakhtari in Georgia. Its President, Mr. Ayalon, has the experience of setting up farming operations in foreign countries and is capable of hiring local staff and managing them for its farming operations. Since the growing season starts in March in most regions of Georgia, it has missed the 2010 growing season. Hence, 2010 will be dedicated to building its infrastructure and locating the financing it require for its Pilot Project. It intends to advertise in local newspapers in Georgia in order to attract a possible local, joint venture partner. It intends to begin its Pilot Project operation in March 2011. It intends to bring Western know-how and precision farming techniques to its Georgian operations. Precision farming is based on proper soil analysis, proper seed choice, and the use of precise amounts of fertilizer, herbicides and pesticides. The use of drip irrigation plays an important role in precision farming by enabling the delivery of exact amounts of water and fertilizer. Additionally, the proper timing of planting, harvesting, fertilizer and pest control are all part of what is known as "precision farming techniques". Precision farming helps improve crop yields, because it is a scientific method that treats each crop individually. The Pilot Project's main focus is to prove its ability to produce vegetables for the local market. It hopes to locate a distributor that will supply its produce to local retailers and local wholesalers who will purchase its produce.