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CBRE Group 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.


CBRE Group 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

CBRE Group Predictability Rank Related Terms

Thank you for viewing the detailed overview of CBRE Group's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.


CBRE Group Business Description

CBRE Group logo
Address
2100 McKinney Avenue, Suite 1250, Dallas, TX, USA, 75201
CBRE Group provides a wide range of real estate services to owners, occupants, and investors worldwide, including leasing, property and project management, and capital markets advisory. Additionally, CBRE's investment management arm manages over $130 billion for clients across diverse public and private real estate strategies.
Executives
Meaney Susan director 9 WEST 57TH STREET SUITE 4200 NEW YORK NY 10019
Barber Madeleine G officer: See Remarks 2100 MCKINNEY AVENUE SUITE 1250 DALLAS TX 75201
Giamartino Emma E. officer: See Remarks 2100 MCKINNEY AVENUE SUITE 1250 DALLAS TX 75201
Kohli Vikramaditya officer: See Remarks 2100 MCKINNEY AVENUE SUITE 1250 DALLAS TX 75201
Munoz Oscar director
Goodman Shira director C/O HENRY SCHEIN, INC 135 DURYEA ROAD MELVILLE NY 11747
Stearns Leah C officer: Chief Financial Officer C/O CBRE 2100 MCKINNEY AVENUE, SUITE 1250 DALLAS TX 75201
Valueact Holdings Ii, L.p. director, other: See Remarks ONE LETTERMAN DRIVE BUILDING D, FOURTH FLOOR SAN FRANCISCO CA 94129
Gilyard Reginald Harold director 1 FIRST AMERICAN WAY SANTA ANA CA 92707
Dhandapani Chandra officer: Chief Digital & Tech. Officer C/O CBRE 2100 MCKINNEY AVENUE, SUITE 1250 DALLAS TX 75201
Durburg John E officer: Chief Operating Officer C/O CBRE 2100 MCKINNEY AVENUE, SUITE 1250 DALLAS TX 75201
Queenan Daniel G officer: CEO, Real Estate Investments C/O CBRE 2100 MCKINNEY AVENUE, SUITE 1250 DALLAS TX 75201
Bazzano Dara officer: See Remarks 100 NORTH SEPULVEDA BLVD. SUITE 1100 EL SEGUNDO CA 90245
Sanjiv Yajnik director 1680 CAPITAL ONE DRIVE MCLEAN VA 22102
Cobert Beth F. director C/O CBRE 2100 MCKINNEY AVENUE, SUITE 1250 DALLAS TX 75201

CBRE Group Headlines

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