7.09 -0.04 (-0.56%) Sell

Don't invest in AGRO now, it is an investor's nightmare

13 min read

ADECOAGRO S.A. (Foreign) delivered massive losses on Thursday. It returned -0.56% to close at 7.09. It is currently trading -32% below it's 52 week high of 10.56.

[Themes containing AGRO]

AGRO showed a down trend over the last 3 months. During this period AGRO returned -4.7% and saw a maximum drawdown of -16.63%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in AGRO till volatility reduces and a clear trend emerges.


AGRO has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 9 days, AGRO underperformed the SP500 index on 53% days.

During the last three months AGRO was mostly loss making and delivered on average -0.06% per day. It's best return during this period (of +4.25%) was on Thursday, 20 Sep, 2018. While it's worst loss in the same period (of -3.25%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 24 Sep, 2018 and went on till 1 Oct, 2018. The trend delivered -6.57% losses to investors. This was followed by a bullish trend that started on 11 Oct, 2018 and ended on 16 Oct, 2018. This bullish trend delivered +8.97% to investors.

On monthly basis, AGRO delivered losses in more months over the last year, than profits. AGRO delivered profits less regularly than SP500 index. AGRO was also a more risky investment than SP500 index as it's worst month in the last year, Mar 2018, returned -16.35% compared to -7.28% returned by SP500 index in Oct 2018. AGRO had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Jan 2018 to Mar 2018) during which period it delivered -29.86%. It is interesting to note that both AGRO and SP500 index significantly outperform during months when quarterly/annual results are announced.

Wealth is like sea-water; the more we drink, the thirstier we become; and the same is true of fame.
-- Arthur Schopenhauer

AGRO is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in AGRO's volatility from 3 Oct, 2018 to 2 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that AGRO has significant negative skewness in it's return distribution. This indicates that AGRO is very risky for short-term investment and can significantly underperform for long durations.

AGRO has more chance of extreme outcomes than the SP500 index. Therefore, AGRO must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than AGRO.

Based on your interest in AGRO you may find it interesting to know that I has shown remarkable performance this year and deserves to be on every investors' watchlist.

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