Theravance Biopharma (Theravance Biopharma) Predictability Rank

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What is Theravance Biopharma 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.

Theravance Biopharma 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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Theravance Biopharma (Theravance Biopharma) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Theravance Biopharma Inc (NAS:TBPH) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

0TB:Germany

Address

Ugland House, South Church Street, George Town, PO Box 309, Grand Cayman, CYM, KY1-1104

Website

https://www.theravance.com

Theravance Biopharma Inc is a diversified biopharmaceutical company focused on the discovery, development, and commercialization of organ-selective medicines. Its purpose is to pioneer a new generation of small-molecule drugs designed to better meet patient needs. Its research is focused on the areas of inflammation and immunology. The firm applies organ-selective expertise to target disease biologically, to discover and develop medicines that may expand the therapeutic index with the goal of maximizing efficacy and limiting systemic side effects. The company develops lung-selective medicines to treat respiratory disease, including FDA-approved YUPELRI (revefenacin) inhalation solution indicated for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD).

Executives

Rhonda Farnum	officer: SVP, Comm & Medical Affairs	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Richard A Graham	officer: SVP, Development	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Kelly James Connor	director	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Susannah Gray	director	10770 WATERIDGE CIRCLE SUITE 200, SAN DIEGO CA 92121
Brett A. Grimaud	officer: SVP, Gen Counsel and Secretary	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Aziz Sawaf	officer: SVP & Chief Financial Officer	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Rick E Winningham	director, officer: Chief Executive Officer	901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO CA 94080
Andrew A. Hindman	officer: SVP, Chief Financial Officer	C/O ACORDA THERAPEUTICS, INC., 420 SAW MILL RIVER ROAD, ARDSLEY NY 10502
Eli Samaha	10 percent owner	ONE WORLD TRADE CENTER, FLOOR 65, NEW YORK NY 10007
Wam Gp Llc	10 percent owner	222 BERKELEY STREET, 16TH FLOOR, BOSTON MA 02116
Andrew M Weiss	10 percent owner	222 BERKELEY STREET, 16TH FLOOR, BOSTON MA 02116
Weiss Asset Management Lp	10 percent owner	222 BERKELEY STREET, 16TH FLOOR, BOSTON MA 02116
Philip D Worboys	officer: SVP, Translational Science	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Brett K Haumann	officer: VP-Clinical Develop.	901 GATEWAY BLVD, SOUTH SAN FRANCISCO CA 94080
Deepika Pakianathan	director	160 BOVET ROAD, SUITE 408, C/O DELPHI VENTURES, SAN MATEO CA 94402