Clarus (Clarus) Predictability Rank

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What is Clarus 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.

Clarus 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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Clarus (Clarus) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Travel & Leisure » Clarus Corp (NAS:CLAR) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

2084 East 3900 South, Salt Lake City, UT, USA, 84124

Website

https://www.claruscorp.com

Clarus Corp is a designer, developer, manufacturer, and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, sport, and skincare markets. The company operates through the Outdoor segment which includes Black Diamond Equipment, PIEPS, and SKINourishment. Precision Sports segment, formerly known as Sierra segment, which includes Sierra and Barnes, includes two iconic American manufacturers of a wide range of high-performance bullets and ammunition for both rifles and pistols. The adventure segment includes Rhino-Rack and MAXTRAX. It derives the majority of its revenue from the Outdoor segment.

Executives

Nicolas Sokolow	director	100 BLVD MALESHERBES, PARIS I0 00000
Aaron Kuehne	officer: CAO and CFO	C/O BLACK DIAMOND INC, 2084 EAST 3900 SOUTH, SALT LAKE CITY UT 84124
Donald House	director	4944 MONUMENT ROAD, JASPER GA 30143
Michael A Henning	director	4 WINCOMA DRIVE, HUNTINGTON NY 11743
Warren B Kanders	director, 10 percent owner, officer: Exec. Chman. of the Bd. of Dir	ONE LANDMARK SQUARE, 22ND FLOOR, STAMFORD, CT 06901
James E Walker	director	1601 WASHINGTON AVENUE, SUITE 800, MIAMI BEACH FL 33139
Michael J Yates	officer: Chief Financial Officer	1925 WEST FIELD COURT, SUITE 200, LAKE FOREST IL 60045
Susan Ottmann	director	2084 EAST 3900 SOUTH, SALT LAKE CITY UT 84124
John Walbrecht	officer: PRESIDENT	2084 EAST 3900 SOUTH, SALT LAKE CITY UT 84124
Mark D. Ritchie	officer: Chief Operating Officer	10141 EASTDELL DRIVE, SANDY UT 84092
Zeena Freeman	director, officer: President	C/O BLACK DIAMOND, INC., 2084 EAST 3900 SOUTH, SALT LAKE CITY UT 84124
Kanders Gmp Holdings Llc	10 percent owner	ONE LANDMARK SQUARE, 22ND FLOOR, STAMFORD CT 06901
Peter R. Metcalf	director, officer: CEO and President	2084 EAST 3900 SOUTH, SALT LAKE CITY UT 84124
Robert Schiller	director, officer: Executive Vice Chairman	C/O ARMOR HOLDINGS INC, 1400 MARSH LANDING PARKWAY SUITE 112, JACKSONVILLE FL 32250
Robert N. Peay	officer: Chief Financial Officer	2084 EAST 3900 SOUTH, SALT LAKE CITY UT 84124