4 (5)
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.
Southern Copper 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
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
Southern Copper (Southern Copper) Business Description
Traded in Other Exchanges
Address
7310 North 16th Street, Suite 135, Phoenix, AZ, USA, 85020
Southern Copper Corp is an integrated producer of copper and other minerals and operates the mining, smelting, and refining facilities in Peru and Mexico. Its production includes copper, molybdenum, zinc, and silver. The company operates through the following segments: Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations. Southern Copper generates the majority of its revenue from the sale of copper and the rest from the sale of non-copper products, such as molybdenum, silver, zinc, lead, and gold. Its geographical segments are The Americas, Europe, and Asia.
Executives
| Castillo Sanchez Mejorada Enrique |
director |
C/O SOUTHERN COPPER CORPORATION, 11811 NORTH TATUM BLVD., SUITE 2500, PHOENIX AZ 85028 |
| Palomino Bonilla Luis Miguel |
director |
C/O SOUTHERN PERU COPPER CORP, 2575 E CAMELBACK RD, PHOENIX AZ 85016 |
| Velasco German Larrea Mota |
director, officer: Chairman of the Board and CEO |
|
| Contreras Lerdo De Tejada Leonardo |
director |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Andreve Vicente Ariztegui |
director |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Perez Alfredo Casar |
director |
C/O SOUTHERN COPPER CORPORATION, AV. CAMINOS DEL INCA 171, LIMA R5 33 |
| Castro Raul Vaca |
officer: General Auditor |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Chapa Ramon Leal |
officer: Senior Vice President |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Quintanilla Daniel Muniz |
director |
C/O SOUTHERN COPPER CORPORATION, 11811 NORTH TATUM BLVD., SUITE 2500, PHOENIX AZ 85028 |
| Mac Gregor Anciola Rafael |
director |
1440 E. MISSOURI AVENUE, STE. C160, PHOENIX AZ 85014 |
| Lopez Abad Rafael F. |
officer: General Auditor |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Lina Vingerhoets |
officer: Comptroller |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Julian Jorge Lazalde |
officer: Secretary |
1440 E. MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Andres C Ferrero |
officer: General Counsel |
1440 E MISSOURI AVENUE, SUITE 160, PHOENIX AZ 85014 |
| Oscar Gonzalez Rocha |
director, officer: President |
|
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
SCCO has been successfully added to your