LiqTech International (LiqTech International) Predictability Rank

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What is LiqTech International 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.

LiqTech International 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

LiqTech International Predictability Rank Related Terms

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LiqTech International (LiqTech International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » LiqTech International Inc (NAS:LIQT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

Industriparken 22C, Ballerup, DNK, DK 2750

Website

https://www.liqtech.com

LiqTech International Inc is a clean technology company which provides technology for gas and liquid purification by manufacturing ceramic silicon carbide filters. The company is engaged in three businesses that are diesel particulate filters (DPF) for the control of soot from diesel engines, turnkey ceramic membranes systems, and complete water treatment plants. The company's product portfolio consists of ceramic silicon membranes for liquid filtration, diesel particulate filters, and kiln furniture. Its operating segment includes Water, Ceramics, and Plastics. The company generates maximum revenue from Ceramics segment. Geographically, it derives a majority of its revenue from Europe.

Executives

Simon Seidelin Stadil	officer: Chief Financial Officer	INDUSTRIPARKEN 22C, BALLERUP G7 2750
Martin Kunz	director	INDUSTRIPARKEN 22C, BALLERUP G7 2750
Fei Chen	director, officer: Chief Executive Officer	STOLBERGSVEJ 23, HORSHOLM G7 2970
Richard A Meeusen	director	P O BOX 23099, MILWAUKEE WI 532230099
Peyton Boswell	director	805 THIRD AVE., 20TH FLOOR, NEW YORK NY 10022
Mark Vernon	director	200 SOUTH BISCAYNE BLVD, MIAMI FL 33131
Alexander J Buehler	director	C/O INSITUFORM TECHNOLOGIES, INC., 17988 EDISON AVENUE, CHESTERFIELD MO 63005
Laurence W Lytton	10 percent owner	467 CENTRAL PARK WEST, NY NY 10025
Awm Investment Company, Inc.	10 percent owner	527 MADISON AVENUE, SUITE 2600, NEW YORK NY 10022
Claus Toftegaard	officer: Chief Financial Officer	INDUSTRIPARKEN 22C, BALLERUP G7 2750
Peter Leifland	director	VALEVAGEN 21,5-18264, DJURSHOLM V7 00000
Joel Gay	director	10264 NW 75TH TERRACE, DORAL FL 33178
Norman H Pessin	other: See Explanation of Responses	C/O LEVY, HARKINS & CO., INC., 366 MADISON AVENUE, 14TH FLOOR, NEW YORK NY 10017
Sandra F Pessin	other: See Explanation of Responses	C/O NORMAN PESSIN, 366 MADISON AVENUE, 14TH FLOOR, NEW YORK NY 10017
Brian L. Pessin	other: See Explanation of Responses	310 EAST 75TH STREET, APT. 2A, NEW YORK NY 10021