What is PEDEVCO 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.
PEDEVCO 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
PEDEVCO (PEDEVCO) Business Description
Traded in Other Exchanges
Address
575 N. Dairy Ashford, Suite 210, Houston, TX, USA, 77079
PEDEVCO Corp is an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied. In particular, the company focuses on legacy proved properties where there is a long production history, well-defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. The current properties of the company are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the Permian Basin) and in the Denver-Julesberg Basin (D-J Basin) in Colorado.
Executives
| John Douglas Schick |
officer: President |
514 BRIAR KNOLL DR., HOUSTON TX 77079 |
| Paul Anthony Pinkston |
officer: CAO and PFO and AO |
450 GEARS ROAD, SUITE 860, HOUSTON TX 77067 |
| Moore Clark |
officer: Executive VP |
12244 SANTA TERESA DRIVE, SAN RAMON CA 94538 |
| John J Scelfo |
director |
333 LAS OLAJ WAY, 1010, FORT LAUDERDALE FL 33301 |
| Ivar Siem |
director |
710 N. POST OAK RD., STE. 512, HOUSTON TX 77024 |
| Simon G Kukes |
10 percent owner |
|
| Sgk 2018 Revocable Trust |
10 percent owner |
575 N. DAIRY ASHFORD, ENERGY CENTER II, SUITE 210, HOUSTON TX 77079 |
| Viktor Tkachev |
10 percent owner |
ARHITEKTORA VLASOVA STREET 22, APT 93, MOSCOW 1Z 117393 |
| Harold Douglas Evans |
director |
20711 FAIRWATER DRIVE, KATY TX 77450 |
| Sk Energy Llc |
director, 10 percent owner, officer: Chif Executive Officer |
5100 WESTHEIMER, SUITE 200, HOUSTON TX 77056 |
| Gregory L Overholtzer |
officer: Chief Financial Officer |
120 ROSE ORCHARD WAY, SAN JOSE CA 95134 |
| Michael L Peterson |
director, officer: CEO and President |
17 CANARY COURT, DANVILLE CA 94526 |
| Frank C Ingriselli |
director, 10 percent owner, officer: President |
250 EAST HARTSDALE AVE, HARTSDALE NY 10530 |
| Adam Mccune Mcafee |
director |
4125 BLACKHAWK PLAZA CIRCLE, SUITE 201, DANVILLE CA 94506 |
| David Z Steinberg |
director |
4125 BLACKHAWK PLAZA CIRCLE, SUITE 201, DANVILLE CA 94506 |
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