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PreVu (PRVU) Predictability Rank


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What is PreVu 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.

PreVu 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

PreVu Predictability Rank Related Terms

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PreVu (PRVU) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » PreVu Inc (OTCPK:PRVU) » Definitions » Predictability Rank
Comparable Companies
GMANQ IVDN FJBHF DEST BEBE CBK SSI SMRT NWY CHKE TTTXF DXLG BOOT RTMAF TLYS CTRN SCVL FRAN ASNA CATO
Traded in Other Exchanges
N/A
Address
7401 Boone Avenue North, Brooklyn Park, MN, USA, 55428
Website
http://www.wilsonsleather.com
PreVu Inc is a retailer of leather outerwear, accessories and apparel in the United States. The company's products include men's and women's fashion leather jackets, handbags and other accessories.
Executives
William F Farley director 700 SOUTH SECOND STREET, #90, MINNEAPOLIS MN 55402
Michael M Searles director, officer: Chief Executive Officer 7401 BOONE AVENUE NORTH BROOKLYN PARK MN 55428
Michael T Sweeney director GOLDNER HAWN, 3700 WELLS FARGO CENTER, 90 SOUTH 7TH ST, MINNEAPOLIS MN 55402
R. Ted Weschler, director, 10 percent owner 404B EAST MAIN STREET, 2ND FLOOR, CHARLOTTESVILLE VA 22902
Peninsula Investment Partners, L.p. 10 percent owner 404B EAST MAIN STREET, 2ND FLOOR, CHARLOTTESVILLE, VA 22902
Peninsula Capital Advisors Llc 10 percent owner 404B EAST MAIN STREET, 2ND FLOOR, CHARLOTTESVILLE, VA 22902
Michael T Cowhing director C/O NEWELL RUBBERMAID INC., THREE GLENLAKE PKWY., ATLANTA 2Q 30328
Michael J Mccoy director 1 HORMEL PLACE, AUSTIN TX 55912
Peter G Michielutti officer: Executive VP, CFO & COO 2400 XENIUM LANE NORTH PLYMOUTH MN 55441
Joel N Waller director 2400 XENIUM LANE NORTH PLYMOUTH MN 55441
Lyle Berman director 10275 WAYZATA BOULEVARD, SUITE 100, MINNETONKA MN 55305
Cheryl L Vitali director
Jenele C Grassle officer: Vice President 605 HWY 169 N, SUITE 400, MINNEAPOLIS MN 55441

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