Security National Financial (Security National Financial) Predictability Rank

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What is Security National Financial 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.

Security National Financial 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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Security National Financial (Security National Financial) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Security National Financial Corp (NAS:SNFCA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

XSNA:Germany

Address

433 West Ascension Way, Salt Lake City, UT, USA, 84123

Website

https://www.securitynational.com

Security National Financial Corp is engaged in the life insurance, cemetery and mortuary, and mortgage loan businesses. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance. Its cemetery and mortuary segment consists of approximately seven mortuaries and five cemeteries in the state of Utah and a cemetery in the state of California. The mortgage loan segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and real estate projects. Geographically all the business activity is functioned through the region of the USA and it derives the majority of revenue from Mortgage segment.

Executives

Gilbert A Fuller	director	55 WANDERWOOD WAY, SANDY UT 84092
Jeffrey Russell Stephens	officer: General Counsel, Corporate Sec	38 NORTHRIDGE WAY, SANDY UT 84092
Howard Craig Moody	director	11892 SOUTH BROOKGLEN DRIVE, SANDY UT 84092
Jason G. Overbaugh	director, officer: VP, Asst. Corp Sec.	13471 SOUTH TUSCALEE WAY, DRAPER UT 84020
Ludmya B Love	director	913 WEST GROUSE CIRCLE, SARATOGA SPRINGS UT 84045
Shital Ashok Mehta	director	59 N SANTA CRUZ AVENUE, STE Y, LOS GATOS CA 95030
Norman G Wilbur	director	2637 MUSTANG DRIVE, MEAD CO 80542
Garrett S. Sill	officer: Acting CFO	2463 SOUTH 1375 WEST, SYRACUSE UT 84075
Adam George Quist	officer: VP Mem Serv Asst Sec. Gen Con	4057 SOUTH OLIVIA VIEW LANE, SALT LAKE CITY UT 84107
Scott M Quist	director, officer: Pres., Chief Operating Officer	7 WANDERWOOD WAY, SANDY UT 84092
Stephen Charles Johnson	officer: VP of Mortgage Operations	886 SOUTH ROUECHE LANE, KAYSVILLE UT 84037
Jordan Capital Am, Llc	10 percent owner	3500 PIEDMONT RD NE, SUITE 330, ATLANTA GA 30305
John L Cook	director	2424 SUMMER OAK CIRCLE, SANDY UT 84092
S. Andrew Quist	director, officer: VP and Assoc General Counsel	272 EAST BROADLEAF CIRCLE, DRAPER UT 84020
Beckstead Jack Lynn Jr	director, officer: V.P. Mortgage Operations	190 NORTH MATTERHORN DRIVE, ALPINE UT 84004