Bassett Furniture Industries (Bassett Furniture Industries) Predictability Rank

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What is Bassett Furniture Industries 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.

Bassett Furniture Industries 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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Bassett Furniture Industries (Bassett Furniture Industries) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Furnishings, Fixtures & Appliances » Bassett Furniture Industries Inc (NAS:BSET) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

3525 Fairystone Park Highway, P.O. Box 626, Bassett, VA, USA, 24055

Website

https://www.bassettfurniture.com

Bassett Furniture Industries Inc is a manufacturer, importer, and retailer of home furnishings products in the United States. It operates through the following segments: The Wholesale segment focuses on the design, manufacture, sourcing, sale, and distribution of furniture products. The Retail segment consists of company-owned stores.

Executives

Spilman Robert H Jr	director, officer: Pres & Chief Executive Officer	C/O BASSETT FURNITURE INDUSTRIES INC, PO BOX 626, BASSETT VA 24055
John Michael Daniel	officer: V P, Chief Accounting Officer	P O BOX 626, 3525 FAIRYSTONE PARK HWY, BASSETT VA 24055
Warden William C Jr	director	PO BOX 2328, HICKORY NC 28603-2328
David C Baker	officer: SVP, Corporate Retail	1012 SHERATON, COURT, MARTINSVILLE VA 24112
Emma S. Battle	director	101 NORTH CHERRY STREET, SUITE 501, WINSTON SALEM NC 27101
Virginia W. Hamlet	director	P.O. BOX 626, BASSETT VA 24055
Wampler William C Jr	director	510 CUMBERLAND STREET, BRISTOL VA 24201-4387
Bassett John E Iii	officer: vice President Global Sourcing	C/O BASSETT FURNITURE INDUSTRIES INC, PO BOX 626, BASSETT VA 24055
John R Belk	director	BELK INC, 2801 WEST TYVOLA ROAD, CHARLOTTE NC 28217-4500
Stefanie Jane Lucas	officer: SVP, Chief Merchandising Offic	P.O. BOX 626, BASSETT VA 24055
Kara Ann Kelchner-strong	officer: SVP, Customer Experience Offic	P.O. BOX 626, BASSETT VA 24055
Mark S Jordan	officer: Vice President Upholstery	BASSETT FURNITURE INDUSTRIES INC, PO BOX 626, BASSETT VA 24055
Jay R Hervey	officer: Vice Pres Sec & Gen Counsel
Bruce Cohenour	officer: SR VP/SALES & MERCHANDISING	HOOKER FURNITURE CORPORATION, 440 EAST COMMONWEALTH BLVD, MARTINSVILLE VA 24112
Kristina K Cashman	director