Fluent (Fluent) Predictability Rank

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What is Fluent 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.

Fluent 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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Fluent (Fluent) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » Fluent Inc (NAS:FLNT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

7TM:Germany

Address

300 Vesey Street, 9th Floor, New York, NY, USA, 10282

Website

https://www.fluentco.com

Fluent Inc is a data-driven digital marketing services company. It performs customer acquisition services by operating digital marketing campaigns, through which it connects its advertiser clients with consumers they are seeking to reach. It delivers data and performance-based marketing executions to its clients, such as consumer brands, direct marketers and agencies across a wide range of industries, including Financial Products & Services, Media & Entertainment, Health & Wellness, Staffing & Recruitment and Retail & Consumer. Geographically it earns key revenue from the U.S segment.

Executives

Matthew Conlin	other: President of Fluent, LLC	C/O IDI, INC., 2650 NORTH MILITARY TRAIL, SUITE 300, BOCA RATON FL 33431
Ryan Schulke	director, other: CEO of Fluent, LLC	C/O IDI, INC., 2650 NORTH MILITARY TRAIL, SUITE 300, BOCA RATON FL 33431
Ryan Macnab Perfit	officer: Interim CFO	C/O FLUENT INC. (N/K/A COGINT, INC.), 33 WHITEHALL STREET, 15TH FLOOR, NEW YORK NY 10004
Frost Gamma Investments Trust	other: Joint Filer	4400 BISCAYNE BLVD, MIAMI FL 33137
Frost Phillip Md Et Al	10 percent owner	4400 BISCAYNE BLVD, MIAMI FL 33137-3227
Donald Huntley Patrick	officer: COO	C/O FLUENT INC. (N/K/A COGINT, INC.), 33 WHITEHALL STREET, 15TH FLOOR, NEW YORK NY 10004
Sugandha Khandelwal	officer: Chief Financial Officer	C/O FLUENT, INC., 300 VESEY STREET, 9TH FLOOR, NEW YORK NY 10282
David Allen Graff	director	300 VESEY STREET, NEW YORK NY 10282
Pfenniger Richard C Jr	director	4400 BISCAYNE BLVD., MIAMI FL 33137
Carla Newell	director	528 RAMONA STREET, PALO ALTO CA 94301
Alexander Mandel	officer: Chief Financial Officer	1061 MARKET STREET, 6TH FLOOR, SAN FRANCISCO CA 94103
Kohn Barbara Shattuck	director	PENN NATIONAL GAMING, INC, 825 BERKSHIRE BLVE, SUITE 200, WYOMISSING PA 19610
Peter Benz	director	171 MADISON AVE., 17 FL.,, NEW YORK NY 10016
Michael Brauser	director	4400 BISCAYNE BLVD., SUITE 850, MIAMI FL 33137
Andrew J Frawley	director	C/O EXCHANGE APPLICATIONS INC, 89 SOUTH STREET, BOSTON MA 02111