Paid (PAYD) Predictability Rank

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What is Paid 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.

Paid 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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Paid (PAYD) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Paid Inc (OTCPK:PAYD) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

225 Cedar Hill Street, Suite 200, Marlborough, MA, USA, 01752

Website

https://www.paid.com

Paid Inc is an all-in-one e-commerce service platform focusing on web development and online auctions. It operates in six segments: Client services, Shipping calculator services, Brewery management software, Merchant processing services, and shipping coordination & label generation services, and corporate operations. The majority of its revenue comes from its shipping coordination & label generation services segment. Some of its products are PaidWeb, PaidCart, PaidPayments, and PaidShipping. Its geographical segments are Canada and the United States, of which the majority of its revenue comes from Canada.

Executives

David Daniel Scott	officer: Chief Operating Officer	798 UPPER KENILWORTH AVE, HAMILTON A6 L8T5A4
Christopher J Coghlin	10 percent owner	27 OTIS STREET, WESTBOROUGH MA 01581
Pratt Allan	director	79 LAURENDALE AVENUE, WATERDOWN A6 L0R 2H3
Laurie Diane Bradley	director	8128 TIMBER TRAIL, WHITE LAKE MI 48386
David Ogden	director	6517 AUTUMN WOODS BLVD., NAPLES FL 34109
Terry Fokas	director	6630 NORTHPORT DRIVE, DALLAS TX 75230
James P O'neil	director	C/O PAID, INC., 40 WASHINGTON STREET, SUITE 3000, WESTBOROUGH MA 01581
Lewis William Austin Iv	director, officer: President and CEO	201 E 87TH STREET, APT 5H, NEW YORK NY 10128
Andrew Pilaro	director	C/O SALES ONLINE DIRECT INC, 4 BRUSSELS ST, WORCESTER MA 01610
Christopher Culross	officer: CFO, Treas., Asst. Secretary	4 BRUSSELS STREET, WORCESTER MA 01610
Gregory Rotman	director, officer: President and CEO	C/O PAID INC, 4 BRUSSELS STREET, WORCESTER MA 01610
Augustine Fund Lp	10 percent owner	141 WEST JACKSON BLVD. STE. 2182, CHICAGO IL 60606
Thomas F Duszynski	10 percent owner	141 W. JACKSON, SUITE 2182, CHICAGO IL 60604
John T Porter	10 percent owner	141 W. JACKSON, SUITE 2182, CHICAGO IL 60604
Brian D Porter	10 percent owner	141 W. JACKSON, SUITE 2182, CHICAGO IL 60604

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