What is SVB Financial Group 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.
SVB Financial Group 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
SVB Financial Group (SVB Financial Group) Business Description
Traded in Other Exchanges
Address
3003 Tasman Drive, Santa Clara, CA, USA, 95054-1191
SVB Financial Group provides loans and ancillary financial services to startups, private equity, and venture capital firms. The bank has four segments: Silicon Valley Bank, SVB Private, SVB Capital, and SVB Securities. In addition to providing loans to venture-capital-backed startups, the company invests in private equity and venture capital funds of funds. The bank operates throughout the United States and maintains offices in Canada, the United Kingdom, Israel, China, India, Germany, Denmark, and Ireland.
Executives
| C. Allen Parker |
director |
420 MONTGOMERY STREET, SAN FRANCISCO CA 94104 |
| Steven G Panagos |
director |
C/O SPIRIT MTA REIT, 2727 NORTH HARWOOD STREET, SUITE 300, DALLAS TX 75201 |
| Richard Devon Daniels |
director |
3005 TASMAN DRIVE, SANTA CLARA CA 95054 |
| Nicholas Grossi |
officer: Interim CFO |
2770 SAND HILL ROAD, MENLO PARK CA 94025 |
| William C Kosturos |
officer: Chief Restructuring Officer |
C/O WASHINGTON MUTUAL, INC., 1301 SECOND AVENUE, SEATTLE WA 98101 |
| Gregory W Becker |
officer: President and CEO |
3003 TASMAN DRIVE, SANTA CLARA CA 95054 |
| Daniel J Beck |
officer: Chief Financial Officer |
3005 TASMAN DRIVE, SANTA CLARA CA 95054 |
| Michelle Draper |
officer: Chief Marketing Officer |
177 WESTLAWN AVE, DALY CITY CA 94015 |
| Beverly Kay Matthews |
director |
C/O COHERENT, INC., 5100 PATRICK HENRY DRIVE, SANTA CLARA CA 95054 |
| Kim Petra Olson |
officer: Chief Risk Officer |
3003 TASMAN DRIVE, SANTA CLARA CA 95054 |
| Laura Cushing |
officer: Chief Human Resources Officer |
3003 TASMAN DRIVE, SANTA CLARA CA 95054 |
| Thomas C. King |
director |
C/O CLEAR CHANNEL OUTDOOR HOLDINGS, INC., 4830 NORTH LOOP 1604W, SUITE 111, SAN ANTONIO TX 78249 |
| Garen K Staglin |
director |
C/O EXLSERVICE HOLDINGS, INC., 320 PARK AVENUE 29TH FL, NEW YORK NY 10022 |
| Michael Descheneaux |
officer: Chief Financial Officer |
3003 TASMAN DRIVE, SANTA CLARA CA 95054 |
| Philip C Cox |
officer: Head EMEA India & President,UK |
ORCHARD HOUSE 40 BARRINGTON ROAD, FOXTON CAMBRIDGE, LONDON X0 CB22 6SL |
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