What is Farmers & Merchants Bancorp Predictability Rank?
5 (5)
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.
Farmers & Merchants Bancorp 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
Farmers & Merchants Bancorp (Farmers & Merchants Bancorp) Business Description
Traded in Other Exchanges
N/A
Address
111 W. Pine Street, Lodi, CA, USA, 95240
Farmers & Merchants Bancorp is a bank holding company. The bank offers services such as checking accounts, savings accounts, money market accounts, online banking, mobile banking, home loans, and other banking services.
Executives
| Craig W. James |
director |
111 W. PINE ST., LODI CA 95240 |
| Kyle Koelbel |
officer: Executive Vice President |
121 W. PINE STREET, LODI CA 95240 |
| Jay J Colombini |
officer: Executive Vice President |
111 W. PINE ST., LODI CA 95240 |
| David Zitterow |
officer: Executive Vice President |
111 W. PINE ST, LODI CA 95240 |
| J. Ryan Misasi |
officer: Executive Vice President |
111 W. PINE ST., LODI CA 95240 |
| Bart R Olson |
officer: Executive Vice President |
PACWEST BANCORP, 9701 WILSHIRE BOULEVARD, SUITE 700, BEVERLY HILLS CA 90212 |
| John W Weubbe |
officer: Executive Vice President |
121 W PINE STREET, LODI CA 95240 |
| Kevin Sanguinetti |
director |
|
| Mark K Olson |
officer: Executive Vice President |
121 W. PINE STREET, 20 EAST CARRILLO STREET, LODI CA 95240 |
| Terrence A Young |
director |
111 W. PINE ST., LODI CA 95240 |
| Steven K. Green |
director |
111 W. PINE ST., LODI CA 95240 |
| Calvin J Seuss |
director |
1249 S. AVENA, LODI CA 95240 |
| Deborah E Hodkin |
officer: Executive Vice President |
1919 CRYSTALWOOD LN, LODI CA 95242 |
| Gary J. Long |
director |
320 LINCOLN CENTER, STOCKTON CA 95027 |
| Edward Jr Corum |
director |
1005 12TH ST, SUITE 6, SACRAMENTO CA 95814 |
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