What is Revolution Medicines 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.
Revolution Medicines 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
Revolution Medicines (Revolution Medicines) Business Description
Traded in Other Exchanges
Address
700 Saginaw Drive, Redwood City, CA, USA, 94063
Revolution Medicines Inc is a clinical-stage precision oncology company focused on developing novel targeted therapies to inhibit elusive, frontier targets within notorious growth and survival pathways, with particular emphasis on the RAS and mTOR signaling pathways. The company's products include RMC-4630, a SHP2 inhibitor, RAS(ON) portfolio, and SOS1 and 4EBP1/mTORC1 programs.
Executives
| Stephen Michael Kelsey |
officer: See Remarks |
C/O GERON CORPORATION, 230 CONSTITUTION DRIVE, MENLO PARK CA 94025 |
| Jeff Cislini |
officer: General Counsel |
C/O REVOLUTION MEDICINES, INC., 700 SAGINAW DRIVE, REDWOOD CITY CA 94063 |
| Mark A Goldsmith |
director, officer: See Remarks |
925 PAGE MILL ROAD, PALO ALTO CA 94304 |
| Margaret A Horn |
officer: See Remarks |
925 PAGE MILL ROAD, PALO ALTO CA 94304 |
| Jack Anders |
officer: Chief Financial Officer |
C/O REVOLUTION MEDICINES, INC., 700 SAGINAW DRIVE, REDWOOD CITY CA 94063 |
| Barbara Weber |
director |
C/O REVOLUTION MEDICINES, INC., 700 SAGINAW DRIVE, REDWOOD CITY CA 94063 |
| Xiaolin Wang |
officer: See Remarks |
C/O REVOLUTION MEDICINES, INC., 700 SAGINAW DRIVE, REDWOOD CITY CA 94063 |
| Thilo Schroeder |
director |
C/O NEXTECH INVEST LTD., BAHNHOFSTRASSE 18, ZURICH V8 8001 |
| Lorence H. Kim |
director |
C/O SERES HEALTH, INC., 161 FIRST STREET, CAMBRIDGE MA 02472 |
| Sushil Patel |
director |
C/O REPLIMUNE GROUP, INC., 500 UNICORN PARK, THIRD FLOOR, WOBURN MA 01801 |
| Third Rock Ventures Iii, L.p. |
10 percent owner |
29 NEWBURY STREET, 3RD FLOOR, BOSTON MA 02116 |
| Flavia Borellini |
director |
C/O REVOLUTION MEDICINES, INC., 700 SAGINAW DRIVE, REDWOOD CITY CA 94063 |
| Third Rock Ventures Ii, L.p. |
10 percent owner |
29 NEWBURY STREET, 3RD FLOOR, BOSTON MA 02116 |
| Peter Svennilson |
director, 10 percent owner |
1700 OWENS STREET, SUITE 500, SAN FRANCISCO CA 94158 |
| Vincent A. Miller |
director |
C/O FOUNDATION MEDICINE, INC., ONE KENDALL SQUARE, SUITE B3501, CAMBRIDGE MA 02139 |
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