PIMCO Municipalome Fund II (PIMCO Municipalome Fund II) Predictability Rank

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What is PIMCO Municipalome Fund II 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.

PIMCO Municipalome Fund II 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

PIMCO Municipalome Fund II Predictability Rank Related Terms

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PIMCO Municipalome Fund II (PIMCO Municipalome Fund II) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » PIMCO Municipal Income Fund II (NYSE:PML) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1633 Broadway, New York, NY, USA, 10019

Website

http://www.pimco.com

PIMCO Municipal Income Fund II is a closed-end management investment company. Its investment objective is to seek to provide current income exempt from federal income tax. The fund portfolio of investments consists of investments in different sectors such as education, healthcare, and others.

Executives

Wells Fargo Municipal Capital Strategies, Llc	10 percent owner	375 PARK AVENUE, NEW YORK NY 10152
Kyle Francis Christine	other: SEE REMARKS	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Maria Marchenko Golota	officer: ASSISTANT TREASURER	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Jason Raul Duran	officer: VICE PRESIDENT	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Gregory John Mason	officer: VICE PRESIDENT	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Sonali Shah Pier	other: SEE REMARKS	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Jason Robert Steiner	other: SEE REMARKS	650 NEWPORT CENTER DR., NEWPORT BEACH CA 92660
Douglas Benjamin Burrill	officer: Vice President	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Kenneth W. Lee	officer: Vice President	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Kathleen Ann Mccartney	director	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Keith Adam Werber	officer: VICE PRESIDENT	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Elizabeth Davis Cantrill	other: SEE REMARKS	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Julie Ann Meggers	other: SEE REMARKS	C/O PIMCO, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Mark Allen Jelic	officer: Vice President	C/O PACIFIC INVESTMENT MANAGEMENT, 650 NEWPORT CENTER DRIVE, NEWPORT BEACH CA 92660
Grace Vandecruze	director	125 TOWNPARK DRIVE, SUITE 300, KENNESAW GA 30144