Compass Diversified Holdings (Compass Diversified Holdings) Predictability Rank

View and export this data going back to 2006. Start your Free Trial

What is Compass Diversified 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.

Compass Diversified 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

Compass Diversified Holdings Predictability Rank Related Terms

Thank you for viewing the detailed overview of Compass Diversified Holdings's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.

Compass Diversified Holdings (Compass Diversified Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Conglomerates » Compass Diversified Holdings (NYSE:CODI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

CODIpC.PFD:USA CODIpB.PFD:USA CODIpA.PFD:USA

Address

301 Riverside Avenue, Second Floor, Westport, CT, USA, 06880

Website

https://compassdiversified.com

Compass Diversified Holdings is a diversified business conglomerate based in the United States having two groups: branded consumer business and niche industrial business. Branded consumer businesses are characterized as those businesses that capitalize on a valuable brand name in their respective market sector. It includes 5.11, Ergobaby, Liberty Safe, and Velocity Outdoor. Niche industrial businesses are characterized as those businesses that focus on manufacturing and selling particular products and industrial services within a specific market sector. It includes Advanced Circuits, Arnold, Foam Fabricators, and Sterno. The company has operations in the United States, Canada, Europe, Asia Pacific, and other International areas.

Executives

Ryan J Faulkingham	other: See Remark (a)	SIXTY ONE WILTON ROAD, SECOND FLOOR, WESTPORT CT 06880
Harold S Edwards	other: See Remark (a)	SIXTY ONE WILTON ROAD, SECOND FLOOR, WESTPORT CT 06880
Teri Shaffer	other: See Remark (a)	301 RIVERSIDE AVENUE, SECOND FLOOR, WESTPORT CT 06880
Nancy Mahon	other: See Remark (a)	C/O TPG PACE BENEFICIAL FINANCE CORP., 301 COMMERCE STREET, SUITE 3300, FORT WORTH TX 76102
Alexander S. Bhathal	other: See Remark (a)	301 RIVERSIDE AVENUE, SECOND FLOOR, WESTPORT CT 06880
James Bottiglieri	other: See Remark (a)	2187 ATLANTIC ST, STAMFORD CT 06902
Larry L Enterline	other: See Remark (a)	2709 WATER RIDGE PARKWAY, 2ND FLOOR, CHARLOTTE NC 28217
Gordon M Burns	other: See Remark (a)	AZTAR CORPORATION, 2390 E. CAMELBACK RD., SUITE 400, PHOENIX AZ 85016
Compass Group Investments, Ltd.	10 percent owner	BELVEDERE BUILDING, 69 PITTS BAY ROAD, HAMILTON HM 08 D0 00000
Patrick A Maciariello	other: See Remarks (a)	301 RIVERSIDE AVENUE, SECOND FLOOR, WESTPORT CT 06880
Elias Sabo	other: See Remarks (a)	2709 WATER RIDGE PARKWAY, 2ND FLOOR, CHARLOTTE NC 28217
Simon Heidi Locke	other: See Remark (a)	26 KENSETT LANE, DARIEN CT 06820
Sarah Gaines Mccoy	other: See Remark (a)	6300 MERRILL CREEK PARKWAY, SUITE B, EVERETT WA 98203-5862
C Sean Day	other: See Remark (a)
D Eugene Ewing	other: See Remark (a)	SIXTY ONE WILTON ROAD, SECOND FLOOR, WESTPORT CT 06880