Merus NV (Merus NV) Predictability Rank

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What is Merus NV 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.

Merus NV 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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Merus NV (Merus NV) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Merus NV (NAS:MRUS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

2GH:Germany

Address

Uppsalalaan 17, Utrecht, NLD, 3584 CT

Website

https://www.merus.nl

Merus NV is a clinical-stage immuno-oncology company. It develops bispecific antibody therapeutics. The company is developing innovative full-length human bispecific antibody therapeutics, referred to as Biclonics. Merus only reportable segment comprising the discovery and development of innovative bispecific therapeutics. Some of its products in the pipeline include MCLA-128; MCLA-117; MCLA-158 and others.

Executives

Harry Shuman	officer: Chief Accounting Officer	C/O MERUS N.V., VALELAAN 62, UTRECHT P7 3584 CM
Peter B. Silverman	officer: EVP & General Counsel	C/O MERUS N.V., YALELAAN 62, UTRECHT P7 3584 CM
Sven Ante Lundberg	director, officer: President, CEO & PFO	C/O CRISPR THERAPEUTICS AG, 200 SIDNEY STREET, CAMBRIDGE MA 02139
Biotechnology Value Fund L P	other: See Explanation of Responses	44 MONTGOMERY STREET, 40TH FL, SAN FRANCISCO CA 94104
Kruif John De	officer: Chief Technology Officer	C/O MERUS N.V., YALELAAN 62, UTRECHT P7 3584 CM
Paolo Pucci	director	C/O ARQULE, INC., 1 WALL STREET, 6TH FLOOR, BURLINGTON MA 01803
Len Kanavy	director	C/O MERUS N.V., VALELAAN 62, UTRECHT P7 3584 CM
Maxine Gowen	director
Anand Mehra	director	3000 SAND HILL ROAD, 4-250, MENLO PARK CA 94025
Victor Sandor	director	C/O ARRAY BIOPHARMA INC., 3200 WALNUT STREET, BOULDER CO 80301
Mark T Iwicki	director	84 WATERFORD DRIVE, MARLBOROUGH MA 01752
Gregory D Perry	director	C/O IMMUNOGEN, INC., 830 WINTER ST., WALTHAM MA 02451
Geuijen Cecile A W	officer: SVP & Chief Scientific Officer	C/O MERUS N.V., YALELAAN 62, UTRECHT P7 3584CM
Andrew Joe	officer: SVP, CMO	C/O MERUS N.V., VALELAAN 62, UTRECHT P7 3584 CM
Mark Throsby	officer: EVP & Chief Scientific Officer	C/O MERUS N.V., YALELAAN 62, UTRECHT P7 3584 CM