FibroGen (FibroGen) Predictability Rank

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What is FibroGen 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.

FibroGen 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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FibroGen (FibroGen) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » FibroGen Inc (NAS:FGEN) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

FGEN:Mexico 1FG:Germany 1FG:Germany

Address

409 Illinois Street, San Francisco, CA, USA, 94158

Website

https://www.fibrogen.com

FibroGen Inc is a biotechnology company focused on discovering, developing, and commercializing novel therapeutics to treat serious unmet medical needs. The company generates the vast majority of its revenue in Europe, followed by Japan. Virtually all of FibroGen's revenue to date has been generated from its collaboration agreements. FibroGen seeks partners with research, development, and marketing capabilities and other resources that strengthen the company's ability to advance product candidates.

Executives

Jeffrey William Henderson	director	7000 CARDINAL PLACE, DUBLIN OH 43017
Enrique A Conterno	director, officer: Chief Executive Officer	LILLY CORPORATE CENTER, INDIANAPOLIS IN 46285
Thane Wettig	officer: Chief Commercial Officer	C/O FIBROGEN, INC., 409 ILLINOIS STREET, SAN FRANCISCO CA 94158
Christine Chung	officer: SVP, China Operations	C/O FIBROGEN, INC., 409 ILLINOIS STREET, SAN FRANCISCO CA 94158
Jeffrey L Edwards	director	2525 DUPONT DR, IRVINE CA 92612
Aoife Brennan	director	200 SIDNEY STREET, SUITE 320, C/O SYNLOGIC, INC., CAMBRIDGE MA 02139
Benjamin Cravatt	director	C/O FIBROGEN, INC., 409 ILLINOIS STREET, SAN FRANCISCO CA 94158
Suzanne Blaug	director	C/O FIBROGEN, INC., 409 ILLINOIS STREET, SAN FRANCISCO CA 94158
Maykin Ho	director	C/O AGIOS PHARMACEUTICALS, INC., 88 SIDNEY STREET, CAMBRIDGE MA 02139
James A Schoeneck	director	C/O DEPOMED, INC., 1360 O'BRIEN DRIVE, MENLO PARK CA 94025
Mark Eisner	officer: Incoming Chief Medical Officer	C/O FIBROGEN, INC., 409 ILLINOIS STREET, SAN FRANCISCO CA 94158
Juan Graham	officer: Chief Financial Officer	C/O FIBROGEN, INC., 409 ILLINOIS STREET, SAN FRANCISCO CA 94158
Kearns Thomas F Jr	director	P O BOX 587, WARSAW IN 46581-0587
Pat Controneo	officer: VP, Finance and CFO	C/O FIBROGEN, INC., 409 ILLINOIS ST.,, SAN FRANCISCO CA 94158
Kalevi Kurkijarvi	director	C/O FIBROGEN, INC., 409 ILLINOIS ST.,, SAN FRANCISCO CA 94158