AN shows sign of weakness as investors do cost averaging

AUTONATION, INC. showed marginal outperformance on Wednesday. It increased by +0.59% to close at 34.04. It is currently trading -45% below it's 52 week high of 62.0.

[Themes containing AN]

Buy-and-Hold investors in AN experienced a maximum drawdown of -24.77% over the last three months. It fell by -22.3% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +16.42%.

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Return distribution

AN has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 4 Jan, 2016 to 4 Oct, 2018. Over the last 2 years 11 months and 8 days, AN underperformed the SP500 index on 50% days. Which indicates that on days AN underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months AN was mostly loss making and delivered on average -0.38% per day. It's best return during this period (of +4.38%) was on Tuesday, 23 Oct, 2018. While it's worst loss in the same period (of -4.87%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 27 Sep, 2018 and ended on 5 Oct, 2018. This bearish trend lost -8.1% of investor capital.

During the last year AN had 4 profitable months and 8 loss making months. AN returned profits in fewer months than SP500 index. AN was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -16.62% compared to -7.28% returned by SP500 index in Oct 2018. AN had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Aug 2018 to Dec 2018) during which period it delivered -34.06%. It is interesting to note that both AN and SP500 index significantly outperform during months when quarterly/annual results are announced.

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AN 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 AN's volatility from 13 Sep, 2018 to 31 Oct, 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 AN has significant negative skewness in it's return distribution. This indicates that AN is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in AN you may find it interesting to know that OPNT, EPIX and IMTE are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.