Smartnd (Smartnd) Predictability Rank

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What is Smartnd 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.

Smartnd 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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Smartnd (Smartnd) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Smart Sand Inc (NAS:SND) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

1SD:Germany

Address

28420 Hardy Toll Road, Suite 130, Spring, TX, USA, 77373

Website

https://www.smartsand.com

Smart Sand Inc is a fully integrated frac sand supply and services company that offers complete mine-to-well site proppant supply and logistics solutions. It produces Northern White frac sand, which is a premium proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells. Its product portfolio includes Smart System, which includes SmartDepot Silo and SmartPath Loader. The company caters its products and services to oil and natural gas exploration and production companies and oilfield service companies. The majority of its revenue comes from Sand Sales, followed by logistics.

Executives

Andrew R Speaker	other: SEE REMARKS	10 HIGHWAY 31, PO BOX 278, PENNINGTON NJ 08534
Clearlake Capital Group, L.p.	director, 10 percent owner	233 WILSHIRE BOULEVARD, SUITE 800, SANTA MONICA CA 90401
Christopher M. Green	officer: Vice President of Accounting	C/O SMART SAND, INC., 28420 HARDY TOLL ROAD, SUITE 130, SPRING TX 77373
William John Young	officer: SEE REMARKS	C/O SMART SAND, INC., 24 WATERWAY AVENUE, SUITE 350, THE WOODLANDS TX 77380
Lee E Beckelman	officer: Chief Financial Officer	12001 NORTH HOUSTON ROSSLYN, HOUSTON TX 77086
Clearlake Capital Management Ii, L.p.	director, 10 percent owner	233 WILSHIRE BOULEVARD, SUITE 800, SANTA MONICA CA 90401
Richard J Shearer	officer: President-Industrial Products	C/O EMERGE ENERGY SERVICES LP, 1400 CIVIC PLACE, SUITE 250, SOUTHLAKE TX 76092
Susan E Neumann	officer: SEE REMARKS	C/O SMART SAND, INC., 24 WATERWAY AVENUE, SUITE 350, THE WOODLANDS TX 77380
James Douglas Young	officer: SEE REMARKS	24 WATERWAY AVENUE, SUITE 350, THE WOODLANDS TX 77380
Frank Porcelli	director	800 SCUDDERS MILL RD, PLAINSBORO NJ 08536
Charles Edwin Young	director, 10 percent owner, officer: CEO	C/O SMART SAND, INC., 24 WATERWAY AVENUE, SUITE 350, THE WOODLANDS TX 77380
Ccp Mm, Llc	director, 10 percent owner	233 WILSHIRE BOULEVARD, SUITE 800, SANTA MONICA CA 90401
Timothy Pawlenty	director	C/O DIGITAL RIVER, INC., 10380 BREN ROAD WEST, MINNETONKA MN 55343-9072
Robert Kiszka	officer: Execute VP of Operations	C/O SMART SAND, INC., 24 WATERWAY AVENUE, SUITE 350, THE WOODLANDS TX 77380
Sharon Spurlin	director	333 CLAY ST, SUITE 1600, HOUSTON TX 77002