Federal-Mogul Holdings (Federal-Mogul Holdings) Predictability Rank

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What is Federal-Mogul Holdings 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.

Federal-Mogul Holdings 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

Federal-Mogul Holdings Predictability Rank Related Terms

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Federal-Mogul Holdings (Federal-Mogul Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Vehicles & Parts » Federal-Mogul Holdings Corp (NAS:FDML) » Definitions » Predictability Rank

Traded in Other Exchanges

N/A

Address

Website

http://www.federalmogul.com

Federal-Mogul Holdings Corp is supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction and safety systems. It supplies components, accessories and systems to the automotive, small engine, heavy-duty, marine, railroad, agricultural, off-road, aerospace and energy, industrial and transportation markets, including customers in both the original equipment manufacturers and services market and the replacement market. The Company operates in two segments, Powertrain and Motorparts. The Powertrain segment focuses on original equipment products for automotive, heavy duty and industrial applications. The Motorparts segment sells and distributes a broad portfolio of products in the aftermarket including more than 20 brands. It also serves original equipment manufacturers with products including braking, wipers, and a limited range of chassis. It has operations in markets including Canada, France, Germany, Italy, Japan, Spain, Sweden, the United Kingdom and the United States, and emerging markets including Argentina, Brazil, China, Czech Republic, Hungary, India, Korea, Mexico, Poland, Russia, South Africa, Thailand, Turkey and Venezuela. The Company's operations, consistent with those of the manufacturing sector in general, are subject to numerous existing and proposed laws and governmental regulations designed to protect the environment, particularly regarding plant wastes and emissions and solid waste disposal.

Executives

Carl C Icahn	10 percent owner	C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH-1, SUNNY ISLES BEACH FL 33160
Rainer Jueckstock	director, officer: See Remarks	27300 WEST 11 MILE ROAD, SOUTHFIELD MI 48034
Michael Nevin	director	C/O ICAHN CAPITAL LP, 767 FIFTH AVENUE, SUITE 4700, NEW YORK NY 10153
John Patouhas	officer: VP & Chief Accounting Officer	C/O FEDERAL-MOGUL HOLDINGS CORPORATION, 27300 WEST 11 MILE ROAD, SOUTHFIELD MI 48034
Louis Pastor	director	C/O XEROX CORPORATION, 201 MERRITT 7, NORWALK CT 06851
Mather Courtney	director	C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH, SUNNY ISLES FL 33160
Jerome Rouquet	officer: VP, Controller & CAO	26555 NORTHWESTERN HIGHWAY, SOUTHFIELD MI 48034
Brett D Pynnonen	officer: Sr VP, Genl Counsel & Secy	26555 NORTHWESTERN HIGHWAY, SOUTHFIELD MI 48033
Kevin P Freeland	officer: See Remarks	5008 AIRPORT RD, ROANOKE VA 24012
Hunter Clark Gary	director	C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH, SUNNY ISLES FL 33160
Michael T Broderick	officer: CEO, Aftermarket Division	26555 NORTHWESTERN HIGHWAY, SOUTHFIELD MI 48033
Sunghwan Cho	director	C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH, SUNNY ISLES FL 33160
Alan Haughie	officer: Senior VP & CFO	860 RIDGE LAKE BLVD., MEMPHIS TN 38120
Jean Brunol	officer: SVP, Business & Ope Strategy	26555 NORTHWESTERN HIGHWAY SOUTHFIELD MI 48034
Ramzi Hermiz	officer: SVP, Vehicle Safety & Pro.	880 STEEL DRIVE VALLEY CITY OH 44280