What is Exelixis Predictability Rank?
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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.
Exelixis 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
Exelixis (Exelixis) Business Description
Traded in Other Exchanges
Address
1851 Harbor Bay Parkway, Alameda, CA, USA, 94502
Exelixis is a biopharmaceutical firm that discovers, develops, and commercializes treatments for cancer. Its lead molecule, cabozantinib, is indicated for the treatment of patients with metastatic medullary thyroid cancer under the name Cometriq and for the treatment of kidney and liver cancer under the name Cabometyx. Exelixis and its partner Roche have also brought Cotellic to market for the treatment of melanoma.
Executives
| Patrick J. Haley |
officer: Sr. Vice President, Commercial |
210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080 |
| Jeffrey Hessekiel |
officer: EVP and General Counsel |
210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080 |
| David Edward Johnson |
director |
590 MADISON AVENUE, NEW YORK NY 10022 |
| Dana Aftab |
officer: CSO/EVP Disc & Trans Research |
EXELIXIS, INC., 1851 HARBOR BAY PARKWAY, ALAMEDA CA 94502 |
| Amy C. Peterson |
officer: EVP Prod Dev & Med Aff & CMO |
C/O MOURANT OZANNES CORPORATE SERVICES, 94 SOLARIS AVENUE, CAMANA BAY, GRAND CAYMAN E9 KY1-1108 |
| Christopher J. Senner |
officer: EVP and CFO |
210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080 |
| Tomas J. Heyman |
director |
C/O AKERO THERAPEUTICS, INC., 170 HARBOR WAY 3RD FLOOR, SOUTH SAN FRANCISCO CA 94080 |
| Bob Oliver |
director |
C/O IMMUNOMEDICS, INC., 300 THE AMERICAN ROAD, MORRIS PLAINS NJ 07950 |
| Caligan Partners Lp |
director, other: See Remarks |
515 MADISON AVENUE, 8TH FLOOR, NEW YORK NY 10022 |
| Jack L Wyszomierski |
director |
SCHERING PLOUGH CORP, ONE GIRALDA FARMS, MADISON NJ 07940-1000 |
| Alan M Garber |
director |
3355 MILTON COURT, MOUNTAIN VIEW CA 94040 |
| Carl B Feldbaum |
director |
C/O EXELIXIS INC, 170 HARBOR WAY, PO BOX 511, SOUTH SAN FRISCISCO CA 94083-0511 |
| Peter Lamb |
officer: EVP, Discovery Research & CSO |
PO BOX 511, 170 HARBOR WAY, SOUTH SAN FRANCISCO CA 94083-0511 |
| George Poste |
director |
515 GALVESTON DR, REDWOOD CITY CA 94063 |
| Lance Willsey |
director |
C/O EXELIXIS INC, 170 HARBOR WAY, SAN FRANCISCO CA 94083 |
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