NexPoint Diversified Real Estate Trust (NexPoint Diversified Real Estate Trust) Predictability Rank

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What is NexPoint Diversified Real Estate Trust 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.

NexPoint Diversified Real Estate Trust 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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NexPoint Diversified Real Estate Trust (NexPoint Diversified Real Estate Trust) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » NexPoint Diversified Real Estate Trust (NYSE:NXDT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

NXDTpA.PFD:USA

Address

300 Crescent Court, Suite 700, Dallas, TX, USA, 75201

Website

https://www.nexpoint.com

NexPoint Diversified Real Estate Trust is a non-diversified, closed-end management investment company. Its investment objective is to provide both current income and capital appreciation. The portfolio of the fund consists of financial, REIT, telecommunication, information technology, asset-backed securities, and others.

Executives

Scott F Kavanaugh	director	25342 DERBYHILL DR., LAGUNA HILLS CA 92653
Catherine D Wood	director	200 CENTRAL AVENUE, SUITE 1850, ST. PETERSBURG FL 33701
James D Dondero	10 percent owner	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Arthur B Laffer	director	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Carol Swain	director	C/O NEXPOINT RESIDENTIAL TRUST, INC., 300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Matthew Goetz	officer: Sr VP-Investments & Asset Mgmt	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Matt Mcgraner	officer: See Remarks	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Sauter Dennis Charles Jr	officer: General Counsel	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Stephanie Vitiello	officer: Chief Compliance Officer	NEXPOINT DIVERSIFIED REAL ESTATE TRUST, 300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Ethan Powell	director	2515 MCKINNEY AVENUE, SUITE 1100, DALLAS TX 75201
Dustin David Norris	director, officer: Secretary	2515 MCKINNEY AVENUE, SUITE 1100, DALLAS TX 75201
Robert J Froehlich	director	405 PARK AVENUE, 15TH FLOOR, NEW YORK NY 10022
Edward N. Constantino	director	DLC REALTY TRUST, INC., 580 WHITE PLAINS ROAD, TARRYTOWN NY 10591
Brian Mitts	officer: PFO & Assistant Treasurer	300 CRESCENT COURT, SUITE 700, DALLAS TX 75201
Bryan A Ward	director	3625 ROSEDALE, DALLAS TX 75205