On Deck Capital (On Deck Capital) Predictability Rank

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What is On Deck Capital 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.

On Deck Capital 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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On Deck Capital (On Deck Capital) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Credit Services » On Deck Capital Inc (NYSE:ONDK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1400 Broadway, 25th Floor, New York, NY, USA, 10018

Website

https://www.ondeck.com

On Deck Capital Inc is a platform for online small business lending. The company transforms small business lending by making it efficient and convenient for small businesses to access capital. Its' platform touches every aspect of the customer lifecycle, including customer acquisition, sales, scoring and underwriting, funding, and servicing and collections. It generates revenue in the form of interest income.

Executives

Bruce P Nolop	director	C/O E*TRADE FINANCIAL CORPORATE SERVICES, 135 EAST 57TH STREET, NEW YORK NY 10022
Chandra Dhandapani	director	C/O CBRE, 2100 MCKINNEY AVENUE, SUITE 1250, DALLAS TX 75201
Jane J. Thompson	director	628 GREEN VALLEY ROAD, SUITE 500, GREENSBORO NC 27408
Mark Torossian	officer: Principal Accounting Officer	1400 BROADWAY, 25TH FLOOR, NEW YORK NY 10018
Kenneth A Brause	officer: Chief Financial Officer	C/O ON DECK CAPITAL INC 1400 BROADWAY 25TH FLOOR NEW YORK NY 10018
Nicholas Peter Brown	officer: Chief Risk Officer	1400 BROADWAY 25TH FLOOR NEW YORK NY 10018
Kampfer Cory	officer: Chief Operations Officer & GC	C/O ON DECK CAPITAL INC. 1400 BROADWAY 25TH FLOOR NEW YORK NY 10018
Ronald F Verni	director	C/O ON DECK CAPITAL INC. 1400 BROADWAY 25TH FLOOR NEW YORK NY 10018
Daniel S Henson	director	C/O HEALTHCARE TRUST OF AMERICA, INC., 16435 N. SCOTTSDALE ROAD, SUITE 320, SCOTTSDALE AZ 85254
Rodriquez Manuel Sanchez	director	C/O FANNIE MAE, 1100 15TH STREET, NW, WASHINGTON DC 20005
Noah Breslow	director, officer: CEO & Chairman	C/O ON DECK CAPITAL INC 1400 BROADWAY 25TH FLOOR NEW YORK NY 10018
Neil E Wolfson	director	C/O ON DECK CAPITAL INC., 1400 BROADWAY 25TH FLOOR, NEW YORK NY 10018
Stuart J. Ellman	10 percent owner	C/O RRE VENTURES, 130 EAST 59TH STREET, 17TH FLOOR, NEW YORK NY 10022
Rre Ventures Gp Iv, Llc	10 percent owner	130 EAST 59TH STREET, 17TH FLOOR, NEW YORK NY 10022
Rre Ventures Iv L P	10 percent owner	126 EAST 56TH ST NEW YORK NY 10022