What is Redfin 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.
Redfin 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
Redfin (Redfin) Business Description
Traded in Other Exchanges
Address
1099 Stewart Street, Suite 600, Seattle, WA, USA, 98101
Redfin Corp is a residential real estate broker. It pairs their own agents with the technology to create a service that is faster and costs less. The company meet customers through listings-search website and mobile application. The company uses same combination of technology and local service to originate mortgage loans and offer title and settlement services. It has four reportable segment which are real estate services, properties, rentals, and mortgage. The company generates majority of the revenue from Real estate services.
Executives
| Christopher John Nielsen |
officer: Chief Financial Officer |
C/O REDFIN CORPORATION, 1099 STEWART STREET, SUITE 600, SEATTLE WA 98101 |
| Bridget Frey |
officer: Chief Technology Officer |
C/O REDFIN CORPORATION, 1099 STEWART STREET, SUITE 600, SEATTLE WA 98101 |
| Anna Stevens |
officer: Chief Human Resources Officer |
3400 CUMBERLAND BOULEVARD, ATLANTA GA 30339 |
| Anthony Ray Kappus |
officer: Chief Legal Officer |
C/O REDFIN CORPORATION, 1099 STEWART STREET, SUITE 600, SEATTLE WA 98101 |
| Christian John Taubman |
officer: Chief Product Officer |
C/O REDFIN CORPORATION, 1099 STEWART STREET SUITE 600, SEATTLE WA 98101 |
| James Slavet |
director |
C/O DFJ VENTURE CAPITAL, 2882 SAND HILL ROAD, SUITE 150, MENLO PARK CA 94025 |
| Glenn Kelman |
director, officer: See Remarks |
500 SANSOME STREET, SAN FRANCISCO CA 94111 |
| David H Lissy |
director |
C/O BRIGHT HORIZONS FAMILY SOLUTIONS, 2 WELLS AVENUE, NEWTON MA 02459 |
| Bradley E Singer |
director |
ONE LETTERMAN DRIVE, BUILDING D, 4TH FLOOR, SAN FRANCISCO CA 94129 |
| Mylod Robert J Jr |
director |
|
| Scott Nagel |
officer: See Remarks |
C/O REDFIN CORPORATION, 1099 STEWART STREET, SUITE 600, SEATTLE WA 98101 |
| Adam Wiener |
officer: Chief Growth Officer |
C/O REDFIN CORPORATION, 1099 STEWART STREET, SUITE 600, SEATTLE WA 98101 |
| Selina Tobaccowala |
director |
C/O REDFIN CORPORATION, 1099 STEWART STREET, SUITE 600, SEATTLE WA 98101 |
| Kerry D Chandler |
director |
1020 HULL STREET, BALTIMORE MD 21230 |
| Robert J Bass |
director |
C/O GROUPON, INC., 600 WEST CHICAGO AVENUE, SUITE 620, CHICAGO IL 60654 |
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
RDFN has been successfully added to your