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.
Anaplan 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
Anaplan (NYSE:PLAN) Business Description
Traded in Other Exchanges
N/A
Address
50 Hawthorne Street, San Francisco, CA, USA, 94105
Anaplan Inc is a United states-based business performance management company. It offers cloud-based business planning and performance management platform based on a single hub where business users can create and use models. Anaplan provides solutions for finance, sales, supply chain, HR & workforce, and marketing. The company also provides professional services, including consulting, implementation, and training. Its geographical segments are the Americas; Europe, the Middle East, and Africa; and Asia-Pacific.
Executives
| Brooke E. Major-reid |
director |
C/O ANAPLAN, INC. 50 HAWTHORNE STREET SAN FRANCISCO CA 94105 |
| Yvonne Wassenaar |
director |
C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140 |
| Allan Leinwand |
director |
C/O MARIN SOFTWARE INCORPORATED, 123 MISSION STREET, 25TH FLOOR, SAN FRANCISCO CA 94105 |
| Vikas D Mehta |
officer: Chief Financial Officer |
50 HAWTHORNE STREET SAN FRANCISCO CA 94105 |
| Ana G. Pinczuk |
officer: Chief Development Officer |
5725 DELPHI DRIVE, TROY MI 48098 |
| William Schuh |
officer: Chief Revenue Officer |
50 HAWTHORNE STREET SAN FRANCISCO CA 94105 |
| Gagan Dhingra |
officer: See remarks |
50 HAWTHORNE ST, SAN FRANCISCO CA 94105 |
| Shasta Ventures Ii Lp |
10 percent owner |
c/o Shasta Ventures, 2440 Sand Hill Road, Suite 300, Menlo Park CA 94025 |
| Suresh Vasudevan |
director |
C/O NIMBLE STORAGE, INC., 211 RIVER OAKS PARKWAY, SAN JOSE CA 95134 |
| Gv Anaplan Spv, L.p. |
10 percent owner |
300 MONTGOMERY STREET SUITE 638 SAN FRANCISCO CA 94104 |
| Ravi Mohan |
director, 10 percent owner |
C/O SHASTA VENTURES 2440 SAND HILL ROAD, SUITE 300 MENLO PARK CA 94025 |
| Jacqueline Berterretche |
10 percent owner |
300 MONTGOMERY STREET, SUITE 638, SAN FRANCISCO CA 94104 |
| Granite Management Ii, Llc |
10 percent owner |
300 MONTGOMERY STREET, SUITE 638, SAN FRANCISCO CA 94104 |
| Christopher Mckay |
10 percent owner |
300 MONTGOMERY STREET, SUITE 638, SAN FRANCISCO CA 94104 |
| Coatue Management Llc |
10 percent owner |
9 WEST 57TH STREET 25TH FLOOR NEW YORK NY 10019 |
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