SL Green Realty (SL Green Realty) Predictability Rank

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What is SL Green Realty Predictability Rank?

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.

SL Green Realty 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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SL Green Realty (SL Green Realty) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » SL Green Realty Corp (NYSE:SLG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

SLGpI.PFD:USA GEI:Germany GEI:Germany S1LG34:Brazil

Address

One Vanderbilt Avenue, New York, NY, USA, 10017

Website

https://www.slgreen.com

SL Green Realty is one of the largest Manhattan property owners and landlords, with interest in around 35 million square feet of wholly owned and joint-venture office space. The company has additional property exposure through its limited portfolio of well-located retail space. It operates as a real estate investment trust.

Executives

Andrew W Mathias	director, officer: President
Burton Edwin T Iii	director	C/O SL GREEN REALTY CORP, 420 LEXINGTON SUITE 1900, NEW YORK NY 10170
Betsy S Atkins	director
Craig M Hatkoff	director	ONE WEST 72ND STREET, NEWYORK NY 10023
Carol N Brown	director	SL GREEN REALTY CORP., ONE VANDERBILT AVENUE, NEW YORK NY 10017
Matthew J. Diliberto	officer: Chief Financial Officer	SL GREEN REALTY CORP., 420 LEXINGTON AVENUE, NEW YORK NY 10179
Andrew S Levine	officer: Chief Legal Officer & GC	C/O SL GREEN REALTY CORP, 420 LEXINGTON SUITE 1900, NEW YORK NY 10170
Alschuler John H Jr	director	C/O SL GREEN REALTY CORP, 420 LEXINGTON SUITE 1900, NEW YORK NY 10170
Stephen L Green	officer: Chairman of the Board	C/O SL GREEN REALITY CORP, 420 LEXINGTON AVE SUITE 1900, NEW YORK NY 10170
Marc Holliday	director, officer: Chief Executive Officer	C/O SL GREEN REALTY CORP, 420 LEXINGTON SUITE 1900, NEW YORK NY 10170
John S Levy	director	C/O SL GREEN REALTY CORP, 420 LEXINGTON SUITE 1900, NEW YORK NY 10170
Lauren B. Dillard	director	SL GREEN REALTY CORP., 420 LEXINGTON AVENUE, NEW YORK NY 10170
James E Mead	officer: Chief Financial Officer	C/O STRATEGIC HOTEL CAPITAL, INC., 77 WEST WACKER DRIVE, SUITE 4600, CHICAGO IL 60601
Gregory F Hughes	officer: Chief Financial Officer
Gerry Nocera	officer: Executive Vice President	C/O SL GREEN REALTY CORP, 420 LEXINGTON SUITE 1900, NEW YORK NY 10170