Profit booking on the minds of ANF investors as it performed better than the broader market
14 Dec, 201813 min read
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ABERCROMBIE & FITCH CO delivered stellar performance today. It gained +0.53% to close at 18.9. During the last week it lost -0.89% and saw a maximum drawdown of -2.19% before bouncing back.
ANF is currently in a down trend. The current bearish signal has generated a profit of +3.52% for investors in the last three months.
ANF has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, ANF underperformed the SP500 index on 48% days. Which indicates that on days ANF underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
ANF was profitable on 53% days in the last three months. During this time, it delivered on average +0.01% per day. It delivered it's best daily return of +20.91%, during this period, on Thursday, 29 Nov, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -12.02% losses to investors. This was followed by a bullish trend that started on 22 Oct, 2018 and ended on 30 Oct, 2018. This bullish trend delivered +19.1% to investors.
ANF had 5 profitable and 7 loss making months over the last year. During the last year, ANF underperformed SP500 index on monthly return basis. ANF significantly outperformed SP500 index in Mar 2018, when it returned +17.35% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ANF had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jul 2018 to Oct 2018) during which period it delivered -18.66%. It is interesting to note that both ANF and SP500 index significantly outperform during months when quarterly/annual results are announced.
I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
-- Warren Buffett
ANF 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 ANF's volatility from 28 Sep, 2018 to 3 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that ANF has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in ANF derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than ANF. Therefore, SP500 must receive a lower allocation than ANF in your portfolio. SP500 index usually has shorter drawdown period than ANF.
On a general note (since you are interested in ANF), two instruments that deserve special mention are TNDM and ECYT. They have significantly outperformed the overall market this year.
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