SRRK (Scholar Rock Holding) Predictability Rank

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What is Scholar Rock Holding 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.

Scholar Rock Holding 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

Scholar Rock Holding Predictability Rank Related Terms

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Scholar Rock Holding Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Scholar Rock Holding Corp (NAS:SRRK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

2QK:Germany

Address

301 Binney Street, 3rd Floor, Cambridge, MA, USA, 02142

Website

https://www.scholarrock.com

Scholar Rock Holding Corp is a late-stage biopharmaceutical company focused on discovering, developing, and delivering innovative medicines for treating serious diseases in which signaling by protein growth factors plays a fundamental role. Its pipeline includes Neuromuscular and Obesity, Immuno-oncology, Fibrotic Disease, and Hematology. The group operates and manages its business as a single segment to assess performance and make operating decisions.

Executives

Tracey Sacco	officer: Chief Commercial Officer	301 BINNEY STREET, 3RD FLOOR, C/O SCHOLAR ROCK HOLDING CORP, CAMBRIDGE MA 02142
Erin Moore	other: SVP, Finance	620 MEMORIAL DRIVE, 2ND FLOOR, 2ND FLOOR, CAMBRIDGE MA 02139
Edward H Myles	director	C/O AMAG PHARMACEUTICALS, INC., 1100 WINTER STREET, WALTHAM MA 02451
Mo Qatanani	officer: SVP and Head of Research	301 BINNEY STREET, 3RD FLOOR, C/O SCHOLAR ROCK HOLDING CORP, CAMBRIDGE MA 02142
Caryn Parlavecchio	officer: CHRO	SCHOLAR ROCK HOLDING CORPORATION, 301 BINNEY STREET, 3RD FLOOR, CAMBRIDGE MA 02142
Junlin Ho	officer: General Counsel	301 BINNEY STREET, CAMBRIDGE MA 02142
Jay T. Backstrom	officer: CEO-Elect	SCHOLAR ROCK HOLDING CORPORATION, 301 BINNEY STREET, 3RD FLOOR, CAMBRIDGE MA 02142
Jing L. Marantz	officer: Chief Medical Officer	C/O KRYSTAL BIOTECH, INC., 2100 WHARTON STREET, SUITE 701, PITTSBURGH PA 15203
Invus Public Equities, L.p.	10 percent owner	C/O THE INVUS GROUP, LLC, 750 LEXINGTON AVENUE, 30TH FLOOR, NEW YORK NY 10022
Srinivas Akkaraju	director	565 EVERETT AVENUE, PALO ALTO CA 94301
Samsara Biocapital Gp, Llc	10 percent owner	251 CHURCHILL AVENUE, PALO ALTO CA 94301
Richard Brudnick	director	BIOVERATIV INC., 225 SECOND AVENUE, WALTHAM MA 02451
Invus Public Equities Advisors, Llc	10 percent owner	C/O THE INVUS GROUP, LLC, 750 LEXINGTON AVENUE, 30TH FLOOR, NEW YORK NY 10022
Amaury Wittouck	10 percent owner	VALLEY PARK, 44, RUE DE LA VALLEE, LUXEMBOURG N4 L2661
Samsara Biocapital, L.p.	10 percent owner	628 MIDDLEFIELD ROAD, PALO ALTO CA 94301