Organovo Holdings (Organovo Holdings) Predictability Rank

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What is Organovo Holdings 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.

Organovo Holdings 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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Organovo Holdings (Organovo Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Organovo Holdings Inc (NAS:ONVO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

4OR1:Germany

Address

11555 Sorrento Valley road, Suite 100, San Diego, CA, USA, 92121

Website

https://www.organovo.com

Organovo Holdings Inc is a biotechnology company, which designs and creates functional and three-dimensional human tissues for medical research and therapeutic applications. It also develops and commercializes a platform technology for the generation of three-dimensional human tissues that can be employed in drug discovery and development, biological research, and as therapeutic implants for the treatment of damaged or degenerating tissues and organs. The company collaborates with pharmaceutical and academic partners to develop human biological disease models in three dimensions. Organovo's key instrument platform is the NovoGen Bioprinter. The firm's 3-D bioprinting technologies create tissues using living cells and biocompatible hydrogels.

Executives

David Gobel	director	440 STEVENS AVENUE, SUITE 200, SOLANA BEACH CA 92075
Vaidehi Joshi	director	C/O ORGANOVO HOLDINGS, INC., 11555 SORRENTO VALLEY ROAD, SUITE 100, SAN DIEGO CA 92121
Alison Tjosvold Milhous	director	440 STEVENS AVENUE, SUITE 200, SOLANA BEACH CA 92075
Adam K Stern	director	STERN AEGIS VENTURES, 810 7TH AVENUE 22ND FLOOR, NEW YORK NY 10019
Thomas Hess	officer: President, CFO and PFO	366 MADISON AVE. 12TH FLOOR, NEW YORK NY 10017
Douglas Jay Cohen	director	440 STEVENS AVENUE, SUITE 200, SOLANA BEACH CA 92075
Thomas E Jurgensen	officer: General Counsel & Secretary	440 STEVENS AVENUE, SUITE 200, SOLANA BEACH CA 92075
Jeffrey N. Miner	officer: Chief Scientific Officer	440 STEVENS AVENUE, SUITE 200, SOLANA BEACH CA 92075
Chris Heberlig	officer: President and CFO	C/O KINIKSA PHARMACEUTICALS, LTD., CLARENDON HOUSE, 2 CHURCH STREET, HAMILTON D0 HM11
Keith Murphy	director, officer: Executive Chairman	6275 NANCY RIDGE DRIVE, SUITE 110, SAN DIEGO CA 92121
Steven George Hughes	officer: Chief Medical Officer	6275 NANCY RIDGE DRIVE, SAN DIEGO CA 92121
Carolyn Beaver	director	3595 JOHN HOPKINS COURT, SAN DIEGO CA 92121
David Shapiro	director	C/O INTERCEPT PHARMACEUTICALS, INC., 18 DESBROSSES ST., NEW YORK NY 10013
Presnell Sharon Collins	officer: EVP, Research & Development	6275 NANCY RIDGE DRIVE, SUITE 110, SAN DIEGO CA 92121
Taylor Crouch	director, officer: CEO & President	440 STEVENS AVENUE, SUITE 200, SOLANA BEACH CA 92075