Bain Capital Specialty Finance (Bain Capital Specialty Finance) Predictability Rank

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What is Bain Capital Specialty Finance 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.

Bain Capital Specialty Finance 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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Bain Capital Specialty Finance (Bain Capital Specialty Finance) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » Bain Capital Specialty Finance Inc (NYSE:BCSF) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

618:Germany

Address

200 Clarendon Street, 37th Floor, Boston, MA, USA, 02116

Website

https://www.baincapitalbdc.com

Bain Capital Specialty Finance Inc is an externally managed, closed-end, non-diversified management investment company. The company has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940. The company is managed by the Advisor, an investment adviser that is registered with the SEC under the Investment Advisers Act. The advisor also provides the administrative services necessary for the company to operate. The primary focus is capitalizing on opportunities within Bain Capital Credit's Senior Direct Lending Strategy which seeks to provide risk-adjusted returns and current income to investors by investing primarily in middle-market companies with between $10.0 million and $150.0 million in annual EBITDA.

Executives

Clare Stack Richer	director	BAIN CAPITAL, LP, 200 CLARENDON STREET, BOSTON MA 02116
Jessica Yeager	officer: Secretary	200 CLARENDON STREET, BOSTON MA 02116
Thomas A. Hough	director	2613 RUTGERS COURT, PLANO TX 75093
Amy S Butte	director	C/O L CATTERTON MANAGEMENT, 599 WEST PUTNAM AVENUE, GREENWICH CT 06830
Michael A Ewald	officer: President and CEO	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Jeffrey B. Hawkins	director	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Sally F Dornaus	officer: Chief Financial Officer	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Jay Margolis	director	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Michael John Boyle	officer: Vice President and Treasurer	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Patrick M. Dury	officer: Chief Financial Officer	200 CLARENDON STREET, BOSTON MA 02116
Michael Bennett Treisman	officer: Vice President and Secretary	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Bain Capital Credit Member, Llc	10 percent owner	200 CLARENDON STREET, BOSTON MA 02116
Bain Capital Distressed & Special Situations 2016 (f), L.p.	10 percent owner	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
Bcsf Holdings, L.p.	10 percent owner	C/O BAIN CAPITAL CREDIT, LP, 200 CLARENDON STREET, BOSTON MA 02116
David G Fubini	director	D.G. FUBINI CONSULTANTS, LLC, 80 SEARS ROAD, BROOKLINE MA 02445