NovelStem International (NovelStem International) Predictability Rank

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What is NovelStem 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.

NovelStem 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

NovelStem International Predictability Rank Related Terms

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NovelStem International (NovelStem International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Diagnostics & Research » NovelStem International Corp (OTCPK:NSTM) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

2255 Glades Road, Suite 221A, Boca Raton, FL, USA, 33431

Website

https://www.novelstem.com

NovelStem International Corp owns novel stem-cell-based diagnostic technology for predicting patients' resistance to cancer therapies. The technology is also being used for genetic research related to other medical therapies.

Executives

Baker Street Capital Management, Llc	10 percent owner	1875 CENTURY PARK EAST, SUITE 700, LOS ANGELES CA 90067
Vadim Perelman	10 percent owner	1875 CENTURY PARK EAST, SUITE 700, LOS ANGELES CA 90067
Baker Street Capital L.p.	10 percent owner	1875 CENTURY PARK EAST, SUITE 700, LOS ANGELES CA 90067
Stephen Gans	director, 10 percent owner	14850 NW 44TH COURT, OPA LOCKA FL 33054
Shannon River Partners Lp	10 percent owner	850 THIRD AVENUE, 13TH FLOOR, NEW YORK NY 10022
Shannon River Fund Management Co Llc	10 percent owner	850 THIRD AVENUE, 13TH FLOOR, NEW YORK NY 10022
Shannon River Partners Ii, Lp	10 percent owner	850 THIRD AVENUE, 13TH FLOOR, NEW YORK NY 10022
Doonbeg Fund Lp	10 percent owner	850 THIRD AVE, 13TH FLOOR, New York ny 10022
Spencer M. Waxman	director	C/O SHANNON RIVER PARTNERS, 800 THIRD AVENUE 30TH FLOOR, NEW YORK NY 10022
Stanley Morgan	10 percent owner	1585 BROADWAY, NEW YORK NY 10036
Robert D. Epstein	director	2255 GLADES ROAD, BOCA RATON FL 33431
Coghill Capital Management Llc	10 percent owner	233 SOUTH WACKER DRIVE, SUITE 8439, CHICAGO IL 60606
Ccm Master Fund Ltd	10 percent owner	C/O MORGAN STANLEY FUND SERVICES (CAYMAN, LTD CENTURY YARD CRICKET SQ HUTCHINGS DR, PO BOX 2681 GEORGE TOWN E9 00000
Clint D Coghill	10 percent owner
Scott Gomez	officer: Chief Accounting Officer

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