What is Seres Therapeutics Predictability Rank?
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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.
Seres Therapeutics 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
Seres Therapeutics (Seres Therapeutics) Business Description
Traded in Other Exchanges
Address
200 Sidney Street, 4th Floor, Cambridge, MA, USA, 02139
Seres Therapeutics Inc is a microbiome therapeutics platform company operating in the United States. The company is engaged in developing biological drugs which are referred as ecobiotic microbiome therapeutics. The drugs discovered by the company are designed to restore health by repairing the function of a dysbiotic microbiome. The company focuses on implementing its microbiome therapeutics platform to develop ecobiotic microbiome therapeutics that treat dysbiosis in the colonic microbiome. SER-109, the company's product, is designed to prevent further recurrences of Clostridium difficile infection (CDI), a debilitating infection of the colon. In addition, the company is involved in developing SER-262, SER-287, and SER-401.
Executives
| Paula Cloghessy |
officer: See Remarks |
C/O TRANSLATE BIO, INC., 29 HARTWELL AVENUE, LEXINGTON MA 02421 |
| Matthew R. Henn |
officer: Chief Scientific Officer |
C/O SERES THERAPEUTICS, INC., 200 SIDNEY STREET, CAMBRIDGE MA 02139 |
| Eric D. Shaff |
officer: CFO and EVP |
C/O SERES HEALTH, INC., 161 FIRST STREET, CAMBRIDGE MA 02472 |
| Thomas Desrosier |
officer: See Remarks |
65 HAYDEN AVENUE, LEXINGTON MA 02421 |
| Moltke Lisa Von |
officer: See Remarks |
C/O SERESTHERAPEUTICS, INC., 200 SIDNEY STREET, CAMBRIDGE MA 02139 |
| Teresa L. Young |
officer: See Remarks |
C/O SERES THERAPEUTICS, INC., SUITE 1750, HOUSTON TX 77098 |
| David S. Ege |
officer: See Remarks |
C/O SERES THERAPEUTICS, INC., 200 SIDNEY STREET, CAMBRIDGE MA 02139 |
| David Arkowitz |
officer: Chief Financial Officer |
C/O FLEXION THERAPEUTICS, INC., 10 MALL ROAD, SUITE 301, BURLINGTON MA 01803 |
| Claire Fraser |
director |
C/O BECTON, DICKINSON AND COMPANY, FRANKLIN LAKES NJ 07465 |
| Flagship Pioneering Fund Vii General Partner Llc |
10 percent owner |
55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142 |
| Flagship Pioneering Fund Vii, L.p. |
10 percent owner |
55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142 |
| Nutritional Health Ltp Fund, L.p. |
10 percent owner |
55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142 |
| Flagship Ventures Fund Iv, L.p. |
10 percent owner |
55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142 |
| Flagship Ventures Fund Iv General Partner Llc |
10 percent owner |
55 CAMBRIDGE PARKWAY, SUITE 800E, CAMBRIDGE MA 02142 |
| Flagship Ventures Fund Iv-rx, L.p. |
10 percent owner |
55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142 |
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