What is Japan Smaller Capitalization Fund 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.
Japan Smaller Capitalization Fund 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
Japan Smaller Capitalization Fund (Japan Smaller Capitalization Fund) Business Description
Traded in Other Exchanges
N/A
Address
309 West 49th Street, Worldwide Plaza, New York, NY, USA, 10019
Japan Smaller Capitalization Fund Inc is a United States-based non-diversified, closed-end management investment company. Its investment objective is to seek long-term capital appreciation through investments in smaller capitalization Japanese equity securities. Its portfolio of investments consists of different sectors such as banks, chemicals, construction, electric appliances, financing business, food, Information and Communication, Utilities, Real Estate, and others.
Executives
| She Yi |
officer: Assistant Treasurer |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Rodney A Buck |
director |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Atsushi Katayama |
other: Lead Portfolio Manager |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Shinichi Masuda |
officer: Vice President |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Melanie Dana Malc |
officer: Assistant Treasurer |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Paige Ouimet |
director |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Michael Morronngiello |
officer: Vice President |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Hiroyasu Koike |
other: CEO to the Adviser of JOF |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Junko Nakagawa |
other: CEO to the Adviser of JOF |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019-7316 |
| Yuichi Nomoto |
director, officer: President |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019-7316 |
| Zheng Liu |
officer: Vice President |
WORLDWIDE PLAZA, 309 WEST 49TH STREET, NEW YORK NY 10019-7316 |
| Takeshi Toyoshima |
officer: Vice President |
NOMURA ASSET MANAGEMENT USA INC., 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Lee Kelly So Young |
officer: Assistant Treasurer |
NOMURA ASSET MANAGEMENT USA INC., 309 WEST 49TH STREET, NEW YORK NY 10019 |
| Marcia L Macharg |
director |
309 WEST 49TH STREET, NEW YORK NY 10019 |
| Kunio Watanabe |
other: CEO of Adviser of JOF |
C/O NOMURA ASSET MANAGEMENT USA INC., 309 WEST 49TH STREET, NEW YORK NY 10019 |
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