Occidental Petroleum (Occidental Petroleum) 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.

Occidental Petroleum 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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Occidental Petroleum (Occidental Petroleum) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Occidental Petroleum Corp (NYSE:OXY) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

OXY.WS:USA OXY1:Mexico OXY_KZ:Kazakhstan 1OXY:Italy OPC:Germany OPC:Germany OPC:Germany OPC:Germany OXYP34:Brazil

Address

5 Greenway Plaza, Suite 110, Houston, TX, USA, 77046

Website

https://www.oxy.com

Occidental Petroleum is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. At the end of 2022, the company reported net proved reserves of 3.8 billion barrels of oil equivalent. Net production averaged 1,159 thousand barrels of oil equivalent per day in 2022 at a ratio of 75% oil and natural gas liquids and 25% natural gas.

Executives

Berkshire Hathaway Inc	10 percent owner	3555 FARNAM STREET, OMAHA NE 68131
Sylvia J Kerrigan	officer: SVP & Chief Legal Officer	13131 DAIRY ASHFORD, SUITE 600, SUGAR LAND TX 77478
Claire Oneill	director	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Kenneth B. Robinson	director	6301 FITCH PATH, NEW ALBANY OH 43054
Vicky A Bailey	director	2099 PENNSYLVANIA AVNUE, NW, SUITE 1000, WASHINGTON DC 20006
Bob Shearer	director	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Jack B Moore	director	5 GREENWAY PLAZA, STE 110, HOUSTON TX 77046
Andrew Gould	director	C/O SCHLUMBERGER LIMITED, 5599 SAN FELIPE 17TH FLOOR, HOUSTON TX 77056
Neil R Ackerman	officer: Vice President	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Sunil Mathew	officer: Vice President	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Jeff F Simmons	officer: Senior Vice President	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Christopher O Champion	officer: VP, CAO and Controller	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Vicki A. Hollub	officer: Vice President	5 GREENWAY PLAZA, HOUSTON TX 77046
Avedick Baruyr Poladian	director	701 WESTERN AVENUE, GLENDALE CA 91201
Warren E Buffett	10 percent owner	3555 FARNAM ST, STE 1440, OMAHA NE 68131