APOLLO INVESTMENT CORP

14.68 -0.22 (-1.48%) Sell

Don't buy AINV now, it is an investor's nightmare

13 min read

APOLLO INVESTMENT CORP has destroyed investor wealth on Tuesday. It delivered -1.48% to close at 14.68 which is it's 52 week low, down -17% from it's 52 week high.

[Themes containing AINV]

AINV showed a strong bearish trend over the last 3 months. During this period AINV delivered -10.54% and saw a maximum drawdown of -12.77%. There were 2 short signals during this period that returned a cumulative of +4.68% to investors.

Trend

AINV has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 28 Apr, 2017 to 1 Oct, 2018. Over the last 2 years 11 months and 7 days, AINV underperformed the SP500 index on 50% days. Which indicates that on days AINV underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

AINV returned losses on 67% days in the last three months. During this time, it delivered on average -0.17% per day. It delivered it's worst daily return of -6.12%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 6 losing days, which started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -5.95% of investor capital.

The last 12 months saw AINV's investors making profits in 5 months and incurring losses in 7 months. AINV was less consistent in delivering monthly returs than SP500 index. AINV was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -8.87% compared to -7.28% returned by SP500 index in Oct 2018. AINV had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -14.01%. It is interesting to note that both AINV and SP500 index significantly outperform during months when quarterly/annual results are announced.

Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.
-- Peter Lynch.

AINV is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in AINV's volatility from 5 Oct, 2018 to 11 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that AINV has significant positive skewness in it's return distribution. This indicates that investors can expect AINV to recover from drawdowns quickly. Which makes AINV a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in AINV), two mid cap instruments that deserve special mention are SQ and LULU. They have significantly outperformed the overall market.

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