Tronox Holdings (Tronox Holdings) Predictability Rank

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What is Tronox Holdings 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.

Tronox Holdings 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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Tronox Holdings (Tronox Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Chemicals » Tronox Holdings PLC (NYSE:TROX) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

T5X:Germany

Address

263 Tresser Boulevard, Suite 1100, Stamford, CT, USA, 06901

Website

https://www.tronox.com

Tronox Holdings PLC is a vertically integrated manufacturer of TiO2 pigment. It operates titanium-bearing mineral sand mines and beneficiation and smelting operations in Australia & South Africa to produce feedstock materials that can be processed into TiO2 for pigment, high-purity titanium chemicals, including titanium tetrachloride, and ultrafine TiO2 used in certain specialty applications. TiO2 and titanium feedstock, are used to produce paints and coatings, as well as plastics, paper, and printing ink. It has three pigment production facilities in the United States, the Netherlands, and Western Australia and three mining operations in Western Australia and South Africa. North America, Europe, the Middle East, and Africa, and Asia-Pacific regions contribute the vast majority of revenue.

Executives

Vanessa Ann Guthrie	director	263 TRESSER BLVD., SUITE 1100, STAMFORD CT 06901
Stephen J Jones	director	7201 HAMILTON BOULEVARD, ALLENTOWN PA 18195-1501
Mutlaq Hamad Al-morished	director	263 TRESSER BLVD., SUITE 1100, STAMFORD CT 06901
Moazzam A. Khan	director	263 TRESSER BLVD., SUITE 1100, STAMFORD CT 06901
Timothy C Carlson	officer: Senior Vice President, CFO	263 TRESSER BOULEVARD, SUITE 1100, STAMFORD CT 06901
Jonathan Flood	officer: Principal Accounting Officer	263 TRESSER BLVD., SUITE 1100, STAMFORD CT 06901
Jean Francois Turgeon	officer: Executive Vice President	263 TRESSER BOULEVARD, STAMFORD CT 06901
John D Romano	officer: SVP, Chief Commercial Officer	P. O. BOX 268859, OKLAHOMA CITY OK 73126
Jeffrey N Neuman	officer: SVP, General Counsel & Sec.	115 TABOR ROAD, MORRIS PLAINS NJ 07950
John Srivisal	officer: SVP, Business Dev. and Finance	C/O TRONOX HOLDINGS PLC, 263 TRESSER BOULEVARD, SUITE 1100, STAMFORD CT 06901
Sipho Abednego Nkosi	director	EXXARO RESOURCES LTD, P.O. BOX 9229, PRETORIA T3 0001
Raoul Charles Mancini	officer: SVP, Chief HR Officer	410 PARK AVE.; SUITE 1400, NEW YORK NY 10022
Ilan Kaufthal	director	143 E LINDEN AVE, ENGLEWOOD NJ 07631
Wayne A Hinman	director	TRONOX LIMITED, ONE STAMFORD PLAZA, 263 TRESSER BLVD., SUITE 1100, STAMFORD CT 06901
Jeffry N Quinn	director	12935 NORTH FORTY DRIVE, SUITE 201, ST. LOUIS MO 63141