CubeSmart (CubeSmart) Predictability Rank

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What is CubeSmart 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.

CubeSmart 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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CubeSmart (CubeSmart) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » CubeSmart (NYSE:CUBE) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

UK8:Germany UK8:Germany

Address

5 Old Lancaster Road, Malvern, PA, USA, 19355

Website

https://www.cubesmart.com

CubeSmart is a real estate investment trust that acquires, owns, and manages self-storage facilities throughout the United States. The company's real estate portfolio is composed of buildings with numerous enclosed storage areas for both residential and commercial customers to rent mainly on a month-by-month basis. Most of CubeSmart's facilities are located in Florida, Texas, California, New York, and Illinois. Cumulatively, these states account for both the majority of the square footage in the company's real estate portfolio and the majority of its revenue. CubeSmart derives nearly all of its revenue from rental income from tenants utilizing its storage facilities.

Executives

Christopher P Marr	officer: Chief Financial Officer	460 E. SWEDESFORD ROAD, SUITE 3000, WAYNE PA 19087
Jeffrey P Foster	officer: Sr. VP - Chief Legal Officer	460 EAST SWEDESFORD ROAD, SUITE 3000, WAYNE PA 19087
Timothy M Martin	officer: SVP & Chief Accounting Officer	460 E. SWEDESFORD ROAD, SUITE 3000, WAYNE PA 19087
Matthew D Denarie	officer: Chief Accounting Officer	5 OLD LANCASTER ROAD, MALVERN PA 19355
Jennifer Schulte	officer: Chief Human Resources Officer	5 OLD LANCASTER ROAD, MALVERN PA 19355
Jit Kee Chin	director	ONE FEDERAL STREET, 23RD FLOOR, BOSTON MA 02110
Jair K Lynch	director	5 OLD LANCASTER RD, MALVERN PA 19355
Joel D Keaton	officer: Sr VP of Operations	5 OLD LANCASTER ROAD, MALVERN PA 19355
Marianne M Keler	director	12061 BLUEMONT WAY, RESTON VA 20190
Jonathan L Perry	officer: SVP and CIO	5 OLD LANCASTER ROAD, MALVERN PA 19355
Dororthy Dowling	director	5 OLD LANCASTER ROAD, MALVERN PA 19355
Diefenderfer William M Iii	director	300 CONTINENTAL DRIVE, NEWARK DE 19713
Dean Jernigan	director, officer: CEO and President	C/O FARMLAND PARTNERS INC., 8670 WOLFF COURT, SUITE 240, WESTMINSTER CO 80031
Deborah Ratnersalzberg	director	301 WATER ST SE SUITE 201, WASHINGTON DC 20003
John W Fain	director	1000 SEMMES AVE, RICHMOND VA 23224