Green Brick Partners (Green Brick Partners) Predictability Rank

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What is Green Brick Partners 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.

Green Brick Partners 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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Green Brick Partners (Green Brick Partners) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Homebuilding & Construction » Green Brick Partners Inc (NYSE:GRBK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

2G1:Germany 2G1:Germany

Address

2805 Dallas Parkway, Suite 400, Plano, TX, USA, 75093

Website

https://www.greenbrickpartners.com

Green Brick Partners Inc is a homebuilding and land development company. It acquires and develops land, as well as provides land and construction financing to its controlled builders. The company has three reportable segments: builder operations central, builder operations southeast, and land development. The majority of company's revenue is generated from the builder operations central segment that is entirely the operations of builders in Texas. The company is engaged in various aspects of the homebuilding process, including land acquisition and development, entitlements, design, construction, marketing, sales, and brand image creation. In addition to homebuilding, the company provides home financing services, such as mortgage and title, through its subsidiaries.

Executives

David Einhorn	director, 10 percent owner	140 EAST 45TH STREET, 24TH FLOOR, NEW YORK NY 10017
Jed Dolson	officer: See Remarks	3131 HARVARD AVENUE, SUTE 103, DALLAS TX 75205
Dme Capital Management, Lp	director, 10 percent owner	140 EAST 45TH STREET, 24TH FLOOR, NEW YORK NY 10017
Dme Advisors Gp, L.l.c.	director, 10 percent owner	140 EAST 45TH STREET, 24TH FLOOR, NEW YORK NY 10017
Dme Advisors, Lp	director, 10 percent owner	140 EAST 45TH STREET, 24TH FLOOR, NEW YORK NY 10017
Greenlight Capital Inc	director, 10 percent owner	140 EAST 45TH STREET, 24TH FLOOR, NEW YORK NY 10017
Elizabeth Blake	director	BIOFUEL ENERGY CORP., 1600 BROADWAY SUITE 2200, DENVER CO 80202
Harry Brandler	director	2 GRAND CENTRAL TOWER, 140 EAST 45TH STREET, 24TH FLOOR, NEW YORK NY 10017
Kathleen Olsen	director	4 BROOKSIDE DRIVE, PORT WASHINGTON NY 11050
Richard S Press	director	101 BOGLE STREET, WESTON MA 02493
Richard Arthur Costello	officer: Chief Financial Officer	2805 DALLAS PARKWAY, SUITE 400, PLANO TX 75093
Neal J Suit	officer: General Counsel & EVP	C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022
Lila A Murphy	director	2000 S. COLORADO BLVD., SUITE 10200, DENVER CO 80222
John R Farris	director	P.O. BOX 309, FRANKFORT KY 40602-0309
Summer Loveland	officer: Chief Accounting Officer	2805 DALLAS PARKWAY, SUITE 400, PLANO TX 75093