Are you evaluating investing in RSWM? Consider as it was among the best performers
22 Jan, 201913 min read
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RSWM LIMITED was among the best performers on Tuesday. It returned +2.9% to close at 228.65. On a day when the overall market breadth was 70%, it closed higher than 57% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0036%.
RSWM showed a strong up trend over the last 3 months. During this period RSWM returned +15.57% and saw a maximum drawdown of -16.29%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in RSWM till volatility reduces and a clear trend emerges.
RSWM has been underperforming the NIFTY-50 index in recent time, after having outperformed till 7 Feb, 2017. Over the last 3 years and 1 month, RSWM underperformed the NIFTY-50 index on 54% days.
During the last three months RSWM was mostly profitable and delivered on average +0.3% per day. It's best return during this period (of +15.39%) was on Monday, 17 Dec, 2018. While it's worst loss in the same period (of -6.43%) was on Thursday, 20 Dec, 2018. There was initially a bearish trend during this period which started on 11 Dec, 2018 and went on till 14 Dec, 2018. The trend delivered -5.51% losses to investors. This was followed by a bullish trend that started on 26 Dec, 2018 and ended on 1 Jan, 2019. This bullish trend delivered +5.99% to investors.
RSWM had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of RSWM and NIFTY-50 index were the same. RSWM significantly outperformed NIFTY-50 index in Nov 2018, when it returned +22.12% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. RSWM and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both RSWM and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.
RSWM is becoming less volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in RSWM's volatility from 24 Oct, 2018 to 9 Jan, 2019. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.
Advanced/professional short-term investors should note that RSWM has significant negative skewness in it's return distribution. This indicates that RSWM is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than RSWM. Therefore, NIFTY-50 must receive a lower allocation than RSWM in your portfolio. NIFTY-50 index usually has shorter drawdown period than RSWM.
Based on your interest in RSWM you may find it interesting to know that BRITANNIA, BAJFINANCE and HINDUNILVR are large caps that have all shown remarkable performance and qualify to be on every investor's watchlist.
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