ALPHA & OMEGA SEMICONDUCTOR LTD

10.17 -0.04 (-0.39%) Sell

Doubt in the minds of AOSL investors as it delivered massive losses

13 min read

ALPHA & OMEGA SEMICONDUCTOR LTD was among the worst performers today. It fell by -0.39% to close at 10.17. During the last week it delivered +3.67% and saw a maximum drawdown of -4.15% before bouncing back.

[Themes containing AOSL]

Buy-and-Hold investors in AOSL experienced a maximum drawdown of -25.71% over the last three months. It fell by -16.84% 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.

Trend

AOSL has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 28 Nov, 2016 to 25 Oct, 2018. Over the last 2 years 11 months and 10 days, AOSL underperformed the SP500 index on 51% days.

During the last three months AOSL was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +16.38%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -7.39%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 5 losing days, which started on 4 Oct, 2018 and ended on 10 Oct, 2018. This bearish trend lost -12.8% of investor capital.

During the last year AOSL had 5 profitable months and 7 loss making months. AOSL returned profits in fewer months than SP500 index. AOSL significantly outperformed SP500 index in Nov 2018, when it returned +18.88% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. AOSL had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both AOSL and SP500 index significantly outperform during months when quarterly/annual results are announced.

Glamour is what I sell, it's my stock in trade.
-- Marlene Dietrich

AOSL is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in AOSL's volatility from 28 Sep, 2018 to 2 Nov, 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 AOSL 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.

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

Based on your interest in AOSL you may find it interesting to know that ZBRA, PTC and AAXN are small caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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