What is First Eagle Alternative Capital BDC 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.
First Eagle Alternative Capital BDC 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
First Eagle Alternative Capital BDC (First Eagle Alternative Capital BDC) Business Description
Traded in Other Exchanges
N/A
Address
500 Boylston Street, Suite 1200, Boston, MA, USA, 02116
First Eagle Alternative Capital BDC Inc is a closed-end investment company which act as a business development company. The company's investment objective is to generate both current income and capital appreciation, primarily through directly originated first lien secured loans, including unitranche investments. It also makes the second lien, subordinated, or mezzanine debt investments, which may include an associated equity component such as warrants, preferred stock or other similar securities and direct equity co-investments.
Executives
| Robert J. Hickey |
10 percent owner |
1515 WEST 22ND STREET, SUITE 1200, OAK BROOK IL 60523 |
| Christopher J. Flynn |
director, 10 percent owner, officer: See Remarks |
100 FEDERAL STREET 31ST FLOOR, BOSTON MA 02110 |
| Edward J. Giordano |
other: CFO of the Adviser |
C/O H.I.G. CAPITAL, LLC, 1450 BRICKELL AVENUE, 31ST FLOOR, MIAMI FL 33131 |
| Sabrina Rusnak-carlson |
10 percent owner, officer: See Remarks |
100 FEDERAL STREET, 31ST FLOOR, BOSTON MA 02110 |
| Jennifer Wilson |
officer: Chief Accounting Officer |
100 WALL STREET, 11TH FLOOR, NEW YORK NY 10005 |
| Terrence W. Olson |
10 percent owner, officer: See Remarks |
C/O THL CREDIT, INC., 100 FEDERAL STREET, 31ST FL, BOSTON MA 02110 |
| Arnhold & S. Bleichroeder Holdings, Inc. |
10 percent owner |
1345 AVENUE OF THE AMERICAS, NEW YORK NY 10105 |
| William Montgomery Cook |
10 percent owner |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| First Eagle Investment Management, Llc |
10 percent owner |
1345 AVENUE OF THE AMERICAS, NEW YORK NY 10105 |
| Sam W. Tillinghast |
10 percent owner |
C/O THL CREDIT, INC., 100 FEDERAL STREET, 31ST FL, BOSTON MA 02110 |
| James R Fellows |
10 percent owner, officer: See Remarks |
100 FEDERAL STREET, 31ST FLOOR, BOSTON MA 02110 |
| Brian J. Murphy |
10 percent owner |
1515 WEST 22ND STREET, SUITE 1200, OAK BROOK IL 60523 |
| Steven F. Krull |
10 percent owner |
1515 WEST 22ND STREET, SUITE 1200, OAK BROOK IL 60523 |
| Brian W. Good |
10 percent owner |
1515 WEST 22ND STREET, SUITE 1200, OAK BROOK IL 60523 |
| Thlp Debt Partners, L.p. |
10 percent owner |
100 FEDERAL STREET, BOSTON MA 02110 |
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