OP Bancorp (OP Bancorp) Predictability Rank

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What is OP Bancorp 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.

OP Bancorp 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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OP Bancorp (OP Bancorp) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » OP Bancorp (NAS:OPBK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1000 Wilshire Boulevard, Suite 500, Los Angeles, CA, USA, 90017

Website

https://www.myopenbank.com

OP Bancorp is engaged in the financial service domain in the United States. It is a holding company of the Open Bank, which is a California state-chartered an FDIC-insured financial institution. The company core activities reflect accepting deposits and making loans and investments. Its deposit products are demand and time deposits, and the primary lending products are commercial business loans which are offered to small and medium-sized businesses.

Executives

Hyung J Kim	director	1000 WILSHIRE BLVD., SUITE 500, LOS ANGELES CA 90017
Sunny Kwon	director	1000 WILSHIRE BLVD., SUITE 500, LOS ANGELES CA 90017
Yong Sin Shin	director	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Brian Choi	director	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Ock Hee Kim	director	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Ryan Shin	officer: Chief SBA Officer	1000 WILSHIRE BLVD., SUITE 500, LOS ANGELES CA 90017
Jae H. Park	officer: Chief Risk Officer	1000 WILSHIRE BLVD., SUITE 500, LOS ANGELES CA 90017
Ki Won Yoon	officer: Chief Lending Officer	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Kathrine Duncan	officer: Chief Risk Officer	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Ihnsuk Jimmy Bang	officer: Chief Banking Officer	1000 WILSHIRE BLVD., SUITE 500, LOS ANGELES CA 90017
Ernest Dow	director	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Christine Yoon Oh	officer: Chief Financial Officer	3731 WILSHIRE BLVD., SUITE 1000, LOS ANGELES CA 90010
Myung Park	director	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Jason Hwang	director	1000 WILSHIRE BLVD, SUITE 500, LOS ANGELES CA 90017
Sang Kyo Oh	officer: CHIEF CREDIT OFFICER	1000 WILSHIRE BOULEVARD, SUITE 500, LOS ANGELES CA 90017