loanDepot (loanDepot) Predictability Rank

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What is loanDepot 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.

loanDepot 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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loanDepot (loanDepot) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » loanDepot Inc (NYSE:LDI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

LDD:Germany

Address

26642 Towne Centre Drive, Foothill Ranch, CA, USA, 92610

Website

https://www.loandepot.com

loanDepot Inc provides nonbank consumer lending solutions for individuals in the United States. It offers personal, residential home, home refinancing, mortgage and home equity loans. It also provides online mortgage loans for refinancing and home purchases. It serves customers through distribution channels, including consumer direct centres, retail branches, wholesale centres, and consumer finance and servicing centres in the United States. It competes with commercial banks and financial institutions. The Company is subject to governmental laws and regulations.

Executives

Jeff Alexander Walsh	officer: See Remarks	C/O LOANDEPOT, INC., 26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
Frank Martell	director, officer: CEO and President	10 GASTON FARMS ROAD, GREENWICH CT 06831
Dan Binowitz	officer: Managing Director	26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
Darren Graeler	officer: Chief Accounting Officer	6561 IRVINE CENTER DRIVE, IRVINE CA 92618
David R Hayes	officer: Chief Financial Officer	6561 IRVINE CENTER DRIVE, IRVINE CA 92618
Patrick J Flanagan	officer: Chief Financial Officer	C/O LOANDEPOT, 26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
John Hoon Lee	director	26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
Steven Ozonian	director	C/O TREE.COM, INC., 11115 RUSHMORE DRIVE, CHARLOTTE NC 28277
Nicole Carrillo	officer: Chief Accounting Officer	C/O LOANDEPOT, INC., 26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
Jeffrey Michael Dergurahian	officer: See Remarks	C/O LOANDEPOT, 26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
Grassi Joseph J Iii	officer: Chief Risk Officer	C/O FANNIE MAE, 1100 15TH STREET NW, WASHINGTON DC 20005
Gregory Smallwood	officer: Chief Legal Officer	1525 S. BELT LINE RD., COPPELL TX 75019
Anthony Li Hsieh	director, 10 percent owner, officer: Chief Executive Officer	C/O LOANDEPOT, 26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610
Pamela H. Patenaude	director	26642 TOWNE CENTRE DRIVE, C/O LOANDEPOT, INC., FOOTHILL RANCH CA 92610
Michael Linton	director	C/O LOANDEPOT, INC. ATTN GENERAL COUNSEL, 26642 TOWNE CENTRE DRIVE, FOOTHILL RANCH CA 92610