Gleacher (Gleacher) Predictability Rank

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What is Gleacher 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.

Gleacher 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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Gleacher (Gleacher) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » Gleacher & Co Inc (OTCPK:GLCH) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.gleacher.com

Gleacher & Co Inc previously operated an investment banking company. It provided an investment banking business, providing corporate and institutional clients with strategic and financial advisory services, including merger and acquisition, restructuring, recapitalization, and strategic alternative analysis, as well as capital raising, research based investment analysis, and securities brokerage services. The company is now engaged solely in winding up its business and paying or providing for its obligations.

Executives

Bryan Edmiston	officer: Controller	250 WEST 34TH STREET, 3RD FLOOR, C/O WISDOMTREE, INC., NEW YORK NY 10119
Alan J. Mintz	10 percent owner	555 FIFTH AVENUE, 18TH FLOOR, NEW YORK NY 10017
Matlinpatterson Llc	10 percent owner	520 MADISON AVE, NEW YORK NY 10022
David J Matlin	10 percent owner
Mark R Patterson	10 percent owner
Matlinpatterson Asset Management Llc	10 percent owner	520 MADISON AVENUE, NEW YORK NY 10022
Bruce Rohde	director	843 SOUTH 96 STREET, OMAHA NE 68114
Robert A Gerard	director	161 DUANE ST, NEW YORK NY 10013
Henry S Bienen	director	C/O NORTHWESTERN UNIVERSITY, 375 E CHICAGO AVE, ROOM 11-410, CHICAGO IL 60611
Marshall A Cohen	director	1700 E PUTNAM AVE, SUITE 400, OLD GREENWICH CT 06870
Victor E Mandel	director	PO BOX 5962, WASHINGTON DC 20016
Frank Plimpton	director	MATLINPATTERSON GLOBAL ADVISERS LLC, 520 MADISON AVE, NEW YORK NY 10022-4213
Mast Capital Management, Llc	10 percent owner	31 ST. JAMES AVENUE, 6TH FLOOR, BOSTON MA 02116
David J. Steinberg	10 percent owner	C/O MAST CAPITAL MANAGEMENT, LLC, 31 ST. JAMES AVENUE, 6TH FLOOR, BOSTON MA 02116
George C Mcnamee	director	FIRST ALBANY COMPANIES INC., 677 BROADWAY, ALBANY NY 12207-2990

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