GATO (Gatos Silver) Predictability Rank

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What is Gatos Silver 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.

Gatos Silver 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

Gatos Silver Predictability Rank Related Terms

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Gatos Silver Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Gatos Silver Inc (NYSE:GATO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

GATO:Canada

Address

925 West Georgia Street, Suite 910, Vancouver, BC, CAN, V6C 3L2

Website

https://www.gatossilver.com

Gatos Silver Inc is a development and exploration company. It is focused on the production of Cerro Los Gatos Mine and the further exploration and development of the Los Gatos District, both located in Chihuahua, Mexico. The Los Gatos District consists of 14 mineralized zones, including three identified silver-lead-zinc deposits: the Cerro Los Gatos Mine, the Esther deposit, and the Amapola deposit. The Company's reportable segments are based on the Company's mineral interests and management structure and include Mexico and Corporate segments. The Mexico segment engages in the exploration, development, and operation of the Company's Mexican mineral interests and includes the Company's investment in its LGJV.

Executives

Stephen D Bodley	officer: General Counsel	C/O GATOS SILVER, INC., 8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Dale Andres	officer: President	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Anthony Michael Scott	officer: VP, Eval. & Technical Services	C/O GATOS SILVER, INC., 8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
James Woeller	officer: VP, Corp Dev & Bus Improvement	8400 EAST CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Quintanilla Daniel Muniz	director	C/O SOUTHERN COPPER CORPORATION, 11811 NORTH TATUM BLVD., SUITE 2500, PHOENIX AZ 85028
Van Niekerk Pieter A.	officer: Chief Financial Officer	8400 EAST CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Nicolas Vachon	officer: Vice President, Finance	8400 EAST CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Rodrigo Monroy	officer: General Counsel	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLLAGE CO 80111
Stephen A. Orr	director, officer: Chief Executive Officer	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Electrum Silver Us Llc	10 percent owner	535 MADISON AVENUE, 12TH FL., NEW YORK NY 10022
Electrum Group Llc	10 percent owner	535 MADISON AVENUE, 11TH FLOOR, NEW YORK NY 10022
Philip Pyle	officer: VP of Expl & Chief Geologist	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Luis Felipe Huerta	officer: Vice President, Mexico	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
John Kinyon	officer: Chief Operating Officer	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111
Adam Dubas	officer: Chief Administrative Officer	8400 E. CRESCENT PARKWAY, SUITE 600, GREENWOOD VILLAGE CO 80111