ChromaDex (ChromaDex) Predictability Rank

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What is ChromaDex 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.

ChromaDex 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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ChromaDex (ChromaDex) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » ChromaDex Corp (NAS:CDXC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

OCD1:Germany

Address

10900 Wilshire Boulevard, Suite 600, Los Angeles, CA, USA, 90024

Website

https://www.chromadex.com

ChromaDex Corp is a bioscience company dedicated to healthy aging. It is engaged in research on nicotinamide adenine dinucleotide (NAD+), levels of which decline with age. The company is the innovator behind NAD+ precursor nicotinamide riboside (NR), commercialized as the flagship ingredient Niagen. The company has three reportable segment namely Consumer Products, Ingredients segment and Analytical Reference Standards and Services. Majority of the revenue is earned from Consumer Products segment.

Executives

Brianna Gerber	officer: SVP Finance / Interim CFO	C/O CHROMADEX, INC., 1735 FLIGHT WAY, SUITE 200, TUSTIN CA 92782
Champion River Ventures Ltd	10 percent owner	C/O 7F, CHEUNG KONG CENTER, 2 QUEEN'S ROAD, CENTRAL K3 00000
Jaksch Frank L Jr	director, 10 percent owner, officer: Chief Executive Officer	10005 MUIRLANDS BOULEVARD, SUITE G FIRST FLOOR, IRVINE CA 92618
Robert N Fried	director	100 NORTH CRESCENT DRIVE, BEVERLY HILLS CA 90210
Steven D Rubin	director	OPKO HEALTH, INC., 4400 BISCAYNE BLVD., MIAMI FL 33137
Li Ka Shing	10 percent owner	79 DEEP WATER BAY ROAD, HONG KONG F4 00000
Chau Hoi Shuen Solina Holly	10 percent owner	SUITES PT. 2909 & 2910, HARBOUR CENTRE, 25 HARBOUR ROAD, WANCHAI K3 999077
Hamed Shahbazi	director	C/O CHROMADEX, INC., 1735 FLIGHT WAY, SUITE 200, TUSTIN CA 92782
Ann Cohen	director	C/O CHROMADEX CORPORATION, 10900 WILSHIRE BLVD. STE 600, LOS ANGELES CA 90024
Kristin Patrick	director	3329 CAY DRIVE, SHERMAN OAKS CA 91423
Ng Wang Yu Gary	director	ROOM 1709 HARBOUR CENTER, 25 HARBOUR ROAD, WANCHAI K3 -
Caroline S Levy	director	2424 N FEDERAL HIGHWAY, SUITE 208, BOCA RATON FL 33431
Stephen A Block	director	INTERNATIONAL FLAVORS & FRAGRANCES INC., 521 WEST 57TH ST, NEW YORK NY 10019
Lisa Hatton Harrington	officer: General Counsel	53 SEA TERRACE, NEWPORT COAST CA 92657
Kevin M Farr	officer: Chief Financial Officer	MATTEL, INC., 333 CONTINENTAL BLVD, M1-1518, EL SEGUNDO CA 90245