American Homes 4 Rent (American Homes 4 Rent) Predictability Rank

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What is American Homes 4 Rent Predictability Rank?

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.

American Homes 4 Rent 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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American Homes 4 Rent (American Homes 4 Rent) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » American Homes 4 Rent (NYSE:AMH) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

AMHpH.PFD:USA AMHpG.PFD:USA A4XA:Germany

Address

280 Pilot Road, Las Vegas, NV, USA, 89119

Website

https://www.amh.com

American Homes 4 Rent is a real estate investment trust primarily focused on acquiring, operating, and leasing single-family homes as rental properties throughout the United States. The company's real estate portfolio is largely comprised of single-family properties in urban markets in the Southern and Midwestern regions of the U.S. American Homes 4 Rent's land holdings also represent a sizable percentage of its total assets in terms of value. The company derives the vast majority of its income in the form of rental revenue from single-family properties through short-term or annual leases. The firm's largest geographical markets include Dallas, Texas; Indianapolis, Indiana; Atlanta, Georgia; and Charlotte, North Carolina in terms of the number of properties in each.

Executives

James H Kropp	director	701 WESTERN AVENUE, GLENDALE CA 91201
Bryan Smith	officer: Chief Operating Officer	C/O AMERICAN HOMES 4 RENT, 280 PILOT ROAD, LAS VEGAS NV 89119
Brian Reitz	officer: Chief Accounting Officer	C/O AMERICAN HOMES 4 RENT, 280 PILOT ROAD, LAS VEGAS NV 89119
Sara H. Vogt-lowell	officer: SVP & Chief Legal Officer	C/O AMERICAN HOMES 4 RENT, 23975 PARK SORRENTO, SUITE 300, CALABASAS CA 91302
Douglas N Benham	director
Christopher Lau	officer: Chief Financial Officer	C/O AMERICAN HOMES 4 RENT, 280 PILOT ROAD, LAS VEGAS NV 89119
Matthew J Hart	director	C/O AIR LEASE CORPORATION, 2000 AVENUE OF THE STARS, SUITE 1000N, LOS ANGELES CA 90067
Tamara Hughes Gustavson	director	701 WESTERN AVENUE, GLENDALE CA 91201-2349
Kenneth M. Woolley	director	2795 EAST COTTONWOOD PARKWAY, SUITE 400, SALT LAKE CITY UT 84121
Anita Marie Mayala-mcintyre	other: MGR. HF Investments 2010, LLC	423 CALLE SANTIAGO, NEWBURY PARK CA 91320
Jack E Corrigan	director, officer: Chief Operating Officer	C/O AMERICAN HOMES 4 RENT, 23975 PARK SORRENTO, SUITE 300, CALABASAS CA 91302
Hughes B Wayne Et Al	director	701 WESTERN AVENUE, GLENDALE CA 91201
David P. Singelyn	director, 10 percent owner, officer: Chief Executive Officer	C/O AMERICAN HOMES 4 RENT, 280 PILOT ROAD,, LAS VEGAS NV 89119
Michelle C. Kerrick	director	C/O AMERICAN HOMES 4 RENT (LEGAL DEPT), 280 PILOT ROAD, LAS VEGAS NV 89119
Matthew R Zaist	director	C/O WILLIAM LYON HOMES, 4695 MACARTHUR COURT, 8TH FLOOR, NEWPORT BEACH CA 92660