What is Legacy Housing Predictability Rank?
Not Rated
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.
Legacy Housing 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
Legacy Housing (Legacy Housing) Business Description
Traded in Other Exchanges
N/A
Address
1600 Airport Freeway, Suite No. 100, Bedford, TX, USA, 76022
Legacy Housing Corp builds, sell, and finance manufactured homes and tiny houses that are distributed through a network of independent retailers and company-owned stores and also sold directly to manufactured home communities. The company also provides financing options to customers to facilitate the sale of homes.
Executives
| Curtis Drew Hodgson |
director, 10 percent owner, officer: Co-Chief Executive Officer |
15400 KNOLL TRAIL STE 101 LB 25, DALLAS TX 75248 |
| Kenneth E Shipley |
director, 10 percent owner, officer: Co-Chief Executive Officer |
PO BOX 749, LEVELLAND TX 79336 |
| William G Shipley |
10 percent owner |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Robert Duncan Bates |
director |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Douglas M Shipley |
10 percent owner |
PO BOX 749, LEVELLAND TX 79336 |
| Jeffrey Mark Fiedelman |
officer: CFO |
7026 BAXTERSHIRE DRIVE, DALLAS TX 75230 |
| Jeffrey V Burt |
officer: CFO and Treasurer |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Francisco Javier Coll |
director |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Ronald Carter Arrington |
officer: CFO |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Joseph Phillip Lane |
director |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Jeffrey Kyle Stouder |
director |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Stephen Lynn Crawford |
director |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Neal J Suit |
officer: Exec VP, GC and Secretary |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Mark E Bennett |
director |
C/O LEGACY HOUSING CORPORATION, 1600 AIRPORT FREEWAY, #100, BEDFORD TX 76022 |
| Philip Thomas Blazek |
director |
500 CRESCENT COURT, SUITE 230, DALLAS TX 75201 |
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