Tiptree (Tiptree) Predictability Rank

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What is Tiptree 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.

Tiptree 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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Tiptree (Tiptree) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Tiptree Inc (NAS:TIPT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

660 Steamboat Road, 2nd Floor, Greenwich, CT, USA, 06830

Website

https://www.tiptreeinc.com

Tiptree Inc is a United States-based company that provides specialty insurance products and related services. It has two reportable segments: Insurance and Mortgage. It generates maximum revenue from the Insurance segment. The insurance segment provides specialty insurance, warranty products and related administration services; and the Mortgage segment originates, sell and service conventional, conforming agency and government-insured residential mortgage loans.

Executives

Neil Charles Rifkind	officer: General Counsel and Secretary	C/O TIPTREE INC., 660 STEAMBOAT ROAD, 2ND FL, GREENWICH CT 06830
Jonathan Ilany	director	PO BOX 180, WINCHESTER CENTER CT 06094
Scott T. Mckinney	officer: Chief Financial Officer	660 STEAMBOAT ROAD, 2ND FLOOR, GREENWICH CT 06830
Sandra Bell	officer: Chief Financial Officer	C/O TIPTREE INC., 660 STEAMBOAT ROAD, 2ND FL, GREENWICH CT 06830
Randy Maultsby	officer: President	C/O TIPTREE INC., 660 STEAMBOAT ROAD, 2ND FL, GREENWICH CT 06830
Arif Inayatullah	10 percent owner	C/O TIPTREE INC., 660 STEAMBOAT ROAD, 2ND FL, GREENWICH CT 06830
Paul M Friedman	director	11 DEERFIELD LANE, SCARSDALE NY 10583
Dominique Mielle	director	C/O ANWORTH MORTGAGE ASSET CORPORATION, 1299 OCEAN AVENUE, SECOND FLOOR, SANTA MONICA CA 90401
Michael Gene Barnes	director, officer: Vice Chairman of the Board	TRICADIA CAPITAL, 299 PARK AVENUE, 13TH FLOOR, NEW YORK NY 10171
Nomura Securities Co Ltd	10 percent owner	13-1, NIHONBASHI 1-CHOME, CHUO-KU, TOKYO M0 103-8011
Prosight Specialty Insurance Group, Inc.	10 percent owner	412 MT. KEMBLE AVENUE, SUITE 300C, MORRISTOWN NJ 07960
New York Marine & General Insurance Co	10 percent owner	412 MT. KEMBLE AVENUE, SUITE 300C, MORRISTOWN NJ 07960
Prosight Global, Inc.	10 percent owner	412 MT. KEMBLE AVENUE, SUITE 300C, MORRISTOWN NJ 07960
Gotham Insurance Co	10 percent owner	412 MT. KEMBLE AVENUE, SUITE 300C, MORRISTOWN NJ 07960
Southwest Marine & General Insurance Co	10 percent owner	412 MT. KEMBLE AVENUE, SUITE 300C, MORRISTOWN NJ 07960