What is CTO Realty Growth Predictability Rank?
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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.
CTO Realty Growth 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
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
CTO Realty Growth (CTO Realty Growth) Business Description
Traded in Other Exchanges
Address
369 N. New York Avenue, Suite 201, Winter Park, FL, USA, 32789
CTO Realty Growth Inc is a Florida-based real estate investment trust company, which owns income properties comprised of approximately 2.7 million square feet in diversified markets in the United States. Its portfolio of assets consists of Income Properties Portfolio, management services, Commercial Loan and Investments.
Executives
| John P Albright |
officer: President & CEO |
PO BOX 10809, DAYTONA BEACH FL 32120 |
| Matthew Morris Partridge |
officer: SR. VP & CFO |
70 E. LONG LAKE, BLOOMFIELD HILLS MI 48304 |
| Daniel Earl Smith |
officer: SVP, GEN COUNSEL & CORP SECRET |
P.O. BOX 10809, DAYTONA BEACH FL 32120 |
| Steven Robert Greathouse |
officer: SVP-INVESTMENTS |
PO BOX 10809, DAYTONA BEACH FL 32120 |
| Robert Blakeslee Gable |
director |
PO BOX 10809, DAYTONA BEACH FL 32120 |
| George R Brokaw |
director |
DISH NETWORK CORPORATION, 9601 S MERIDIAN BLVD, ENGLEWOOD CO 80112 |
| Lisa Vorakoun |
officer: VP & CHIEF ACCOUNTING OFFICER |
1140 N. WILLIAMSON BLVD., SUITE 140, DAYTONA BEACH FL 32114 |
| Christopher J Drew |
director |
PO BOX 10809, DAYTONA BEACH FL 32120 |
| Christopher W Haga |
director |
PO BOX 10809, DAYTONA BEACH FL 32120 |
| Laura M Franklin |
director |
CONSOLIDATED-TOMOKA LAND CO., PO BOX 10809, DAYTONA BEACH FL 32120 |
| Casey R Wold |
director |
C/O CONSOLIDATED-TOMOKA LAND CO., PO BOX 10809, DAYTONA BEACH FL 32120 |
| Howard C Serkin |
director |
712 SPINAKERS REACH, PONTE VEDRA FL 32082 |
| Mark E Patten |
officer: Sr. VP & CFO |
PO BOX 10809, DAYTONA BEACH FL 32120 |
| Wintergreen Fund, Inc. |
10 percent owner |
500 INTERNATIONAL DRIVE, SUITE 275, MOUNT OLIVE NJ 07828 |
| William L. Olivari |
director |
141 SAGE BRUSH TRAIL, STE. D, ORMOND BEACH FL 32174 |
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