Horace Mann Educators (Horace Mann Educators) Predictability Rank

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What is Horace Mann Educators 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.

Horace Mann Educators 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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Horace Mann Educators (Horace Mann Educators) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Horace Mann Educators Corp (NYSE:HMN) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1 Horace Mann Plaza, Springfield, IL, USA, 62715-0001

Website

https://www.horacemann.com

Horace Mann Educators Corp is a diversified insurance holding company that markets and underwrites personal lines of property and casualty insurance, retirement annuities, and life insurance. The company's property and casualty operations focus on automobile and homeowner insurance, while the retirement annuities are 403(b) tax-qualified products. Horace Mann Educators markets its products to kindergarten through 12th-grade teachers, administrators, and other employees of public schools and their families. The company uses several former teachers in its salesforce. Its segments include Property and Casualty, Supplemental & Group Benefits, Life & Retirement and Corporate and Other.

Executives

Beverley J. Mcclure	director	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Victor Fetter	director	4828 PARKWAY PLAZA, CHARLOTTE NC 28217
Aaliyah A Samuel	director	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Michael Weckenbrock	officer: Senior Vice President	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Stephen J Mcanena	officer: EVP & Chief Operating Officer	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Matthew P. Sharpe	officer: Executive Vice President	1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Thomas A Bradley	director	199 WATER STREET, 24TH FLOOR, NEW YORK NY 10038
Kimberly A Johnson	officer: Vice President & Controller	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Robert Stricker	director	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Marita Zuraitis	director, officer: President & CEO	THE HANOVER INSURANCE GROUP, INC., 440 LINCOLN STREET, WORCESTER MA 01653
Elaine A Sarsynski	director	312 FARMINGTON AVE, FARMINGTON CT 06032
Derik Tyson Sanders	officer: Vice President	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Stephanie A Fulks	officer: Senior Vice President	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Timothy A Darley	officer: Senior Vice President	C/O HORACE MANN EDUCATORS CORPORATION, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715
Bret A Conklin	officer: SVP & Controller	C/O HORACE MANN EDUCATORS CORP, 1 HORACE MANN PLAZA, SPRINGFIELD IL 62715