Innovus Pharmaceuticals (Innovus Pharmaceuticals) Predictability Rank

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What is Innovus Pharmaceuticals 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.

Innovus Pharmaceuticals 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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Innovus Pharmaceuticals (Innovus Pharmaceuticals) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Innovus Pharmaceuticals Inc (OTCPK:INNV) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

8845 Rehco Road, San Diego, CA, USA, 92121

Website

http://www.innovuspharma.com

Innovus Pharmaceuticals Inc is engaged in the healthcare industry. It is a specialty pharmaceutical company engaged in the commercialization, licensing and development of safe and effective non-prescription medicine and consumer care products to improve men's and women's health and vitality and respiratory diseases. Innovus distributes OTC medicines and consumer and health products directly, through commercial partners to primary care physicians, urologists, gynecologists and therapists, and directly to consumers through its on-line channels, retailers, and wholesalers.

Executives

Armistice Capital, Llc	10 percent owner	510 MADISON AVENUE, 7TH FLOOR, NEW YORK NY 10022
Armistice Capital Master Fund Ltd.	10 percent owner	C/O ARMISTICE CAPITAL, LLC, 510 MADISON AVENUE, 7TH FLOOR, NEW YORK NY 10022
Steven Boyd	10 percent owner	510 MADISON AVENUE, 7TH FLOOR, NEW YORK NY 10022
Vivian H Liu	director
Henry Jemil Esber	director	38 ANGELL BROOK DRIVE, WEST BOYLSTON MA 01853
Randy Berholtz	officer: EVP, CORPORATE DEVELOPMENT	6330 NANCY RIDGE DRIVE, SUITE 103, SAN DIEGO CA 92121
Ryan J Selhorn	officer: VP, CFO	4275 EXECUTIVE SQUARE, SUITE 650, LA JOLLA CA 92037
Bassam Damaj	director, officer: CHIEF EXECUTIVE OFFICER	C/O BIO-QUANT, INC., 6330 NANCY RIDGE DRIVE, SUITE 103, SAN DIEGO CA 92121
Robert Hoffman	officer: Chief Financial Officer	ARENA PHARMACEUTICALS INC, 6166 NANCY RIDER DRIVE, SAN DIEGO CA 92121
Morgan R Brown	officer: See remarks	420 CHIPETA WAY, SALT LAKE CITY UT 84108
Jacki Bartholomew	director	175 SOUTH MAIN STREET, NO 1212, SALT LAKE CITY UT 84111
Thomas L Harkness	director, officer: Secretary	175 SOUTH MAIN STREET, NO 1212, SALT LAKE CITY UT 84111
Wallace Boyack	director, 10 percent owner, officer: President & CEO	175 S MAIN ST, NO 1212, SALT LAKE CITY UT 84111