What is Battalion Oil Predictability Rank?
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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.
Battalion Oil 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
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
Battalion Oil (Battalion Oil) Business Description
Traded in Other Exchanges
Address
3505 West Sam Houston Parkway North, Suite 300, Houston, TX, USA, 77043
Battalion Oil Corp is an independent oil and gas producer operating exclusively in the Delaware Basin. It is an independent energy company focused on the acquisition, production, exploration, and development of onshore liquids-rich oil and natural gas assets in the United States. The company operates in one segment which focuses on oil and natural gas acquisition, production, exploration, and development.
Executives
| Ajay Jegadeesan |
director |
3505 WEST SAM HOUSTON PARKWAY N, HOUSTON TX 77043 |
| Matthew Steele |
officer: CEO |
3505 WEST SAM HOUSTON PARKWAY N, STE 300, HOUSTON TX 77043 |
| Oaktree Capital Group Holdings Gp, Llc |
10 percent owner |
333 SOUTH GRAND AVENUE, 28TH FLOOR, LOS ANGELES CA 90071 |
| Brookfield Asset Management Inc. |
10 percent owner |
BROOKFIELD PLACE, 181 BAY ST, STE 100, PO BOX 762, TORONTO A6 M5J2T3 |
| Gen Iv Investment Opportunities, Llc |
10 percent owner |
1700 BROADWAY, 35TH FLOOR, NEW YORK NY 10019 |
| Lsp Investment Advisors, Llc |
10 percent owner |
1700 BROADWAY, FL. 35, NEW YORK NY 10019 |
| Lsp Generation Iv, Llc |
10 percent owner |
1700 BROADWAY, FLOOR 35, NEW YORK X1 10019 |
| Bam Partners Trust |
10 percent owner |
181 BAY STREET, SUITE 300, TORONTO A6 M5J 2T3 |
| Kristen Mcwatters |
officer: EVP, CFO & Treasurer |
801 LOUISIANA, SUITE 700, HOUSTON TX 77002 |
| Richard Kevin Andrews |
officer: EVP, CFO and Treasurer |
1000 LOUISIANA ST, SUITE 6600, HOUSTON TX 77002 |
| Richard H Little |
officer: Chief Executive Officer |
1000 LOUISIANA STREET, SUITE 1500, HOUSTON TX 77002 |
| Daniel P Rohling |
officer: Chief Operating Officer |
1000 LOUISIANA ST, SUITE 6600, HOUSTON TX 77002 |
| William D Rogers |
director |
P O BOX 30150, RENO NV 89520 |
| Leah R. Kasparek |
officer: VP, Human Resources |
1000 LOUISIANA STREEET, SUITE 6700, HOUSTON TX 77002 |
| Gregory S. Hinds |
director |
1875 LAWRENCE STREET, SUITE 200, DENVER CO 80202 |
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