What is Merrimack Pharmaceuticals Predictability Rank?
1 (5)
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.
Merrimack Pharmaceuticals 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
Merrimack Pharmaceuticals (Merrimack Pharmaceuticals) Business Description
Traded in Other Exchanges
N/A
Address
One Broadway, 14th Floor, Cambridge, MA, USA, 02142
Merrimack Pharmaceuticals Inc is a biotechnology company that discovers, develops, and commercializes innovative medicines that consist of novel therapeutics paired with diagnostics to treat cancer. The company's core approach to systems biology is to apply multidisciplinary capabilities to build functional and predictive computational models of biological systems, such as cell signaling networks. Merrimack also enters into third-party agreements to further process and commercialize its products.
Executives
| Eric Andersen |
director, other: See Remarks |
1507 BERKELEY ST, SUITE 7, SANTA MONICA X1 90404 |
| Gary L Crocker |
director, officer: President |
MERRIMACK PHARMACEUTICALS, INC., ONE KENDALL SQUARE, SUITE B7201, CAMBRIDGE MA 02139 |
| Noah G. Levy |
director, other: See Remarks |
60 EAST 42ND ST, 9TH FLOOR, NEW YORK NY 10165 |
| Ana Radeljevic |
director |
2430 BEACON STREET, UNIT 201, CHESTNUT HILL MA 02467 |
| Ulrik B. Nielsen |
director |
MERRIMACK PHARMACEUTICALS, INC., ONE KENDALL SQUARE, SUITE B7201, CAMBRIDGE MA 02139 |
| Russell T Ray |
director |
2525 DUPONT DR, IRVINE CA 92612 |
| Newtyn Capital Partners, Lp |
other: See Remarks |
60 EAST 42ND STREET, 9TH FLOOR, NEW YORK NY 10165 |
| Ledo Capital, Llc |
other: See Remarks |
60 EAST 42ND STREET, 9TH FLOOR, NEW YORK NY 10165 |
| Newtyn Te Partners, Lp |
other: See Remarks |
60 EAST 42ND STREET, 9TH FLOOR, NEW YORK NY 10165 |
| Newtyn Partners, Lp |
other: See Remarks |
60 EAST 42ND STREET, 9TH FLOOR, NEW YORK NY 10165 |
| Western Standard Partners Qp, L.p. |
other: See Remarks |
5900 WILSHIRE BLVD, SUITE 650, LOS ANGELES CA 90036 |
| Western Standard Partners Lp |
other: See Remarks |
5900 WILSHIRE BLVD, SUITE 650, LOS ANGELES CA 90036 |
| Western Standard Llc |
other: See Remarks |
5757 WILSHIRE BLVD, SUITE 636, LOS ANGELES CA 90036 |
| Newtyn Management, Llc |
other: See Remarks |
60 EAST 42ND STREET, 9TH FLOOR, NEW YORK NY 10165 |
| 22nw Gp, Inc. |
10 percent owner, other: See Explanation of Responses |
1455 NW LEARY WAY, SUITE 400, SEATTLE WA 98107 |
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
MACK has been successfully added to your