Puma Biotechnology (Puma Biotechnology) Predictability Rank

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What is Puma Biotechnology 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.

Puma Biotechnology 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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Puma Biotechnology (Puma Biotechnology) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Puma Biotechnology Inc (NAS:PBYI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

10880 Wilshire Boulevard, Suite 2150, Los Angeles, CA, USA, 90024

Website

http://www.pumabiotechnology.com

Puma Biotechnology Inc is a biopharmaceutical company with a focus on the development and commercialization of innovative products to enhance cancer care. The company in-licenses the global development and commercialization rights to PB272 (neratinib, oral), PB272 (neratinib, intravenous) and PB357. Neratinib, oral was approved by the U.S. FDA in 2017 for the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer, following adjuvant trastuzumab-based therapy, and is marketed in the US as NERLYNX.

Executives

Alan H Auerbach	director, 10 percent owner, officer: PRESIDENT, CEO & SECRETARY	10940 WILSHIRE BLVD. SUITE 600, LOS ANGELES CA 90024
Alvin F Wong	officer: Chief Scientific Officer	C/O PUMA BIOTECHNOLOGY, INC., 10880 WILSHIRE BOULEVARD, SUITE 2150, LOS ANGELES CA 90024
Maximo F Nougues	officer: Chief Financial Officer	C/O PUMA BIOTECHNOLOGY, INC., 10880 WILSHIRE BOULEVARD, SUITE 2150, LOS ANGELES CA 90024
Jeffrey Jerome Ludwig	officer: Chief Commercial Officer	C/O PUMA BIOTECHNOLOGY, INC., 10880 WILSHIRE BOULEVARD, SUITE 2150, LOS ANGELES CA 90024
Douglas M Hunt	officer: See Remarks	C/O PUMA BIOTECHNOLOGY,INC., 10880 WILSHIRE BOULEVARD, SUITE 2150, LOS ANGELES CA 90024
Michael Patrick Miller	director	C/O JAZZ PHARMACEUTICALS PLC, 5TH FL, WATERLOO EXCHANGE, WATERLOO RD, DUBLIN 4 L2
Adrian Senderowicz	director	C/O PUMA BIOTECHNOLOGY, INC., 10880 WILSHIRE BOULEVARD, SUITE 2150, LOS ANGELES CA 90024
Troy Edward Wilson	director	C/O KURA ONCOLOGY, INC., 12730 HIGH BLUFF DRIVE, SUITE 400, SAN DIEGO CA 92130
Allison Dorval	director	C/O INSULET CORPORATION, 600 TECHNOLOGY PARK DRIVE, SUITE 200, BILLERICA MA 01821
Brian M Stuglik	director	C/O VERASTEM, INC., 117, NEEDHAM MA 02494
Jay M Moyes	director
Alessandra Cesano	director	700 BALTIC CIRCLE, SUITE 716, REDWOOD CITY CA 94065
Ann Calby Miller	director	C/O INOVIO PHARMACEUTICALS, INC., 660 W. GERMANTOWN PIKE, SUITE 110, PLYMOUTH MEETING PA 19462
Richard Paul Bryce	officer: SR VP, CLINICAL RESEARCH & DEV	C/O PUMA BIOTECHNOLOGY, INC., 10880 WILSHIRE BOULEVARD, SUITE 2150, LOS ANGELES CA 90024
Hugh O'dowd	director	C/O NEON THERAPEUTICS, INC., 40 ERRIE STREET SUITE 110, CAMBRIDGE MA 02139