Ameriprise Financial (Ameriprise Financial) Predictability Rank

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What is Ameriprise Financial 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.

Ameriprise Financial 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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Ameriprise Financial (Ameriprise Financial) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » Ameriprise Financial Inc (NYSE:AMP) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

AMP:Mexico A4S:Germany A1MP34:Brazil

Address

1099 Ameriprise Financial Center, Minneapolis, MN, USA, 55474

Website

https://www.ameriprise.com

Ameriprise Financial has emerged is a major player in the U.S. market for asset and wealth management, with around $1.3 trillion in total assets under management and advisement at the end of the second quarter of 2023. Ameriprise has one of the largest branded advisor networks in the industry, and about 80% of the company's revenue comes from its asset and wealth management segments. Ameriprise has reduced its exposure to insurance with the sale of its auto and home insurance business in 2019 and discontinuing the sale of its proprietary fixed annuities in 2020. Around 90% of the company's pretax earnings are from the United States.

Executives

Joseph Edward Sweeney	officer: Pres - Fin Pln Prdcts and Serv	AMERIPRISE FINANCIAL, INC., 707 SECOND AVENUE SOUTH, MINNEAPOLIS MN 55474
Walter Stanley Berman	director, officer: Executive VP and CFO	AMERIPRISE FINANCIAL, INC., 707 SECOND AVENUE SOUTH, MINNEAPOLIS MN 55474
James M Cracchiolo	director, officer: Chairman and CEO
Gerard P. Smyth	officer: EVP Technology and CIO	1099 AMERIPRISE FINANCIAL, MINNEAPOLIS MN 55474
Gumer Alvero	officer: President-Insurance&Annuities	GENERAL COUNSEL'S OFFICE, 1098 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
William F Truscott	officer: Pres - U.S. Asset Mgmt, CIO	AMERIPRISE FINANCIAL, INC., 50591 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
Heather J. Melloh	officer: EVP and General Counsel	GENERAL COUNSEL'S OFFICE, 1098 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
Dawn M. Brockman	officer: Interim Controller and PAO	GENERAL COUNSEL'S OFFICE, 1098 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
Armando Jr Pimentel	director	C/O NEXTERA ENERGY, INC., 700 UNIVERSE BLVD., JUNO BEACH FL 33408
Sharpe Robert Francis Jr	director	AMERIPRISE FINANCIAL, INC., 50591 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
Karen Wilson Thissen	officer: Executive VP and GC	1098 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
William Davies	officer: Executive VP, Global CIO	GENERAL COUNSEL'S OFFICE, 1098 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
John R. Hutt	officer: Sr Vice Pres and Controller	1099 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS MN 55474
John Robert Woerner	officer: Senior VP - Str Plan, Bus Dev	AMERIPRISE FINANCIAL, INC., 707 SECOND AVENUE SOUTH, MINNEAPOLIS MN 55474
Moore Colin	officer: EVP & Global CIO	C/O PUTNAM LLC, ONE POST OFFICE SQ, BOSTON MA 02109