4.01 -0.01 (-0.25%) Buy

Don't go shopping for ASFI now, it is underperforming the market

13 min read

ASTA FUNDING INC trailed the broader market on Friday. It delivered -0.25% to close at 4.01. On a day when the overall market breadth was 35%, it closed higher than 83% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

ASFI showed a bullish trend over the last 3 months. During this period ASFI delivered +2.82% and saw a maximum drawdown of -16.47%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ASFI till volatility reduces and a clear trend emerges.


ASFI has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 2 Sep, 2016 to 27 Aug, 2018. Over the last 2 years 11 months and 10 days, ASFI underperformed the SP500 index on 53% days.

During the last three months ASFI delivered losses on 56% days. However, it still managed to end this period in a profit. It's best return during this period (of +20.0%) was on Friday, 16 Nov, 2018. While it's worst loss in the same period (of -8.53%) was on Thursday, 25 Oct, 2018. The longest stort-term trend during this period was 4 profitable days, which started on 20 Sep, 2018 and went on till 25 Sep, 2018. This bullish trend returned +5.05% to investors.

The last 12 months saw ASFI's investors making profits in 6 months and incurring losses in 6 months. ASFI was less consistent in delivering monthly returs than SP500 index. ASFI was also a more risky investment than SP500 index as it's worst month in the last year, Mar 2018, returned -61.73% compared to -7.28% returned by SP500 index in Oct 2018. ASFI had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year.

The Stock Market is designed to transfer money from the Active to the Patient.
-- Warren Buffett

ASFI 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 fall in ASFI's volatility from 17 Sep, 2018 to 9 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 ASFI has significant positive skewness in it's return distribution. This indicates that investors can expect ASFI to recover from drawdowns quickly. Which makes ASFI 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 ASFI. Therefore, SP500 must receive a lower allocation than ASFI in your portfolio. SP500 index usually has shorter drawdown period than ASFI.

Based on your interest in ASFI you may find it interesting to know that I and TNDM have both shown remarkable performance this year and deserve to be on every investors' watchlist.

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