Kulicke & Soffa Industries (Kulicke & Soffa Industries) 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.

Kulicke & Soffa Industries 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

Kulicke & Soffa Industries Predictability Rank Related Terms

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Kulicke & Soffa Industries (Kulicke & Soffa Industries) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Semiconductors » Kulicke & Soffa Industries Inc (NAS:KLIC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

KU1:Germany

Address

1005 Virginia Drive, Fort Washington, Philadelphia, PA, USA, 19034

Website

https://www.kns.com

Kulicke & Soffa Industries Inc is a United States-based company that is principally engaged in designing, manufacturing, and selling capital equipment and expendable tools that are used for assembling semiconductor devices. The company has four reportable segments which includes Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, and Aftermarket Products and Services. Its Ball Bonding Equipment segment which generates the majority of the revenue for the company includes results of the company from the design, development, manufacture and sale of ball bonding equipment and wafer level bonding equipment. The majority of its customers are located in the Asia-pacific region.

Executives

Lester A Wong	officer: Senior Vice President	23A, SERANGOON NORTH AVE 5, #01-01, SINGAPORE U0 554369
Nelson Munpun Wong	officer: Vice President	23A, SERANGOON NORTH AVE 5, #01-01, SINGAPORE U0 554369
Stephen Ray Drake	officer: Vice President	23A SERANGOON NORTH AVENUE 5 #01-01, SINGAPORE U0 554369
Fusen Ernie Chen	director	1005 VIRGINIA DRIVE, FORT WASHINGTON PA 19034
Robert Nestor Chylak	officer: Vice President	1005 VIRGINIA DRIVE, FORT WASHINGTON PA 19034
Denise Dignam	director	C/O THE CHEMOURS COMPANY, 1007 MARKET STREET, WILMINGTON DE 19801
Chan Pin Chong	officer: Senior Vice President	23A SERANGOON NORTH AVENUE 5, #01-01, SINGAPORE U0 554369
Chin Hu Lim	director	23A, SERANGOON NORTH AVENUE 5, #01-01, SINGAPORE U0 554369
Zamir Shai Soloveizik	officer: Vice President	23A SERANGOON NORTH AVENUE 5, #01-01, SINGAPORE U0 554369
Jon A Olson	director	2100 LOGIC DRIVE, SAN JOSE CA 95124
Gregory F Milzcik	director	1005 VIRGINIA DRIVE, FORT WASHINGTON PA 19034
David Jeffrey Richardson	director	LSI LOGIC CORP, 1621 BARBER LANE, MILPITAS CA 95035
Kong Peter T M	director	KULICKE AND SOFFA INDUSTRIES INC., 1005 VIRGINIA DRIVE, FT. WASHINGTON PA 19034
Brian R Bachman	director	1005 VIRGINIA DRIVE, FORT WASHINGTON PA 19034
Thiam Hong Lim	officer: Vice President	23A SERANGOON NORTH AVENUE 5, #01-01, SINGAPORE U0 554369