8.0 -0.2 (-2.44%) Buy

ARCO investors take a moment to reassess their portfolio allocation

13 min read

ARCO significantly underperformed today. On a longer term basis, investors in ARCOS DORADOS HOLDINGS INC. (Foreign) made +0.01% per day. Friday's performance of -2.44% was a underperformance compared to it's daily average.

[Themes containing ARCO]

Buy-and-Hold investors in ARCO experienced a maximum drawdown of -7.84% over the last three months. It delivered +28.0% during this strong bullish trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +19.58%.


ARCO has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 12 Feb, 2016 to 23 Oct, 2017. Over the last 2 years 11 months and 10 days, ARCO outperformed the SP500 index on 51% days.

During the last three months ARCO was mostly profitable and delivered on average +0.42% per day. It's best return during this period (of +6.17%) was on Wednesday, 14 Nov, 2018. While it's worst loss in the same period (of -4.57%) was on Wednesday, 10 Oct, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +12.4%) started on 30 Oct, 2018 and went on till 5 Nov, 2018 while the bearish trend (which returned -7.62%) started on 21 Sep, 2018 and went on till 27 Sep, 2018.

The last 12 months saw ARCO's investors making profits in 4 months and incurring losses in 8 months. ARCO was less consistent in delivering monthly returs than SP500 index. ARCO was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -18.68% compared to -7.28% returned by SP500 index in Oct 2018. ARCO had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both ARCO and SP500 index significantly outperform during months when quarterly/annual results are announced.

When you stop chasing the wrong things you give the right things a chance to catch you.
-- Lolly Daskal

ARCO 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 fall in ARCO's volatility from 30 Oct, 2018 to 27 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 ARCO 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 ARCO. Therefore, SP500 must receive a lower allocation than ARCO in your portfolio. SP500 index usually has shorter drawdown period than ARCO.

Based on your interest in ARCO you may find it interesting to know that IMTE is highly volatile and investors investing in it must take extreme caution. Consider either reducing your exposure to IMTE or sufficiently diversifying your portfolio.

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