Boston Properties (Boston Properties) Predictability Rank

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What is Boston Properties 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.

Boston Properties 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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Boston Properties (Boston Properties) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » Boston Properties Inc (NYSE:BXP) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

BXP:Mexico BO9:Germany BO9:Germany BOXP34:Brazil

Address

800 Boylston Street, Suite 1900, Prudential Center, Boston, MA, USA, 02199-8103

Website

https://www.bxp.com

Boston Properties owns over 190 properties consisting of approximately 54 million rentable square feet of space. The portfolio is dominated by office buildings and is spread across major cities such as New York, Boston, San Francisco, Los Angeles, Seattle, and the Washington, D.C., region. The real estate investment trust also owns limited retail, hotel, and residential properties.

Executives

Eric G Kevorkian	officer: SVP, CLO and Secretary	800 BOYLSTON STREET, SUITE 1900, BOSTON MA 02199
Rodney Diehl	officer: Senior Vice President	FOUR EMBARCADERO CENTER, SAN FRANCISCO CA 94549
Raymond A Ritchey	officer: Executive Vice President	BOSTON PROPERTIES, INC., 901 NEW YORK AVENUE, NW, WASHINGTON DC 20001
Peter V Otteni	officer: Senior Vice President	2200 PENNSYLVANIA AVENUE NW, SUITE 200W, WASHINGTON DC 20037
Carol B. Einiger	director	POST ROCK ADVISORS, LLC, ONE ROCKEFELLER PLAZA, 28TH FLOOR, NEW YORK NY 10020
Tony West	director	1455 MARKET STREET, 4TH FLOOR, SAN FRANCISCO CA 94103
Matthew J Lustig	director	LAZARD FRERES & CO LLC, 30 ROCKEFELLER PLZA 50TH FL, NEW YORK NY 10020
Donna D Garesche	officer: EVP, Chief HR Officer	C/O BOSTON PROPERTIES, INC., 800 BOYLSTON STREET, BOSTON MA 02199
Hilary J. Spann	officer: Executive Vice President	599 LEXINGTON AVENUE, 16TH FLOOR, NEW YORK NY 10022
Mary E Kipp	director	100 N STANTON, EL PASO TX 79901
Douglas T Linde	officer: SVP & CFO	BOSTON PROPERTIES, INC., 800 BOYLSTON STREET, BOSTON MA 02199
Frank D Burt	officer: Senior Vice President	BOSTON PROPERTIES, INC., 800 BOYLSTON STREET, BOSTON MA 02199
John J Stroman	officer: Senior Vice President	2200 PENNSYLVANIA AVENUE NW, SUITE 200W, WASHINGTON DC 20037
Bryan J Koop	officer: Senior Vice President	BOSTON PROPERTIES, INC., 800 BOYLSTON STREET, BOSTON MA 02199
Bruce W Duncan	director	ONE NORTH WACKER DRIVE, SUITE 4200, CHICAGO IL 60606