25.43 -0.74 (-2.9%) Sell

CPSI is a falling knife, continues to bleed every investor trying to catch it

13 min read

COMPUTER PROGRAMS & SYSTEMS INC has destroyed investor wealth on Friday. It fell by -2.9% to close at 25.43. On a day when the overall market breadth was 35%, it closed higher than 77% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing CPSI]

Buy-and-Hold investors in CPSI experienced a maximum drawdown of -10.5% over the last three months. It fell by -4.04% during this 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.


CPSI has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 8 Feb, 2016 to 27 Sep, 2018. Over the last 2 years 11 months and 10 days, CPSI underperformed the SP500 index on 51% days.

During the last three months CPSI delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +5.95%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -5.46%) was on Monday, 12 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 26 Nov, 2018 and went on till 3 Dec, 2018. This bullish trend returned +6.26% to investors.

During the last year CPSI had 5 profitable months and 7 loss making months. CPSI returned profits in fewer months than SP500 index. CPSI was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -12.5% compared to -7.28% returned by SP500 index in Oct 2018. CPSI 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 -26.05%.

"Finance is wholly different from the rest the economy.

CPSI 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 CPSI's volatility from 5 Oct, 2018 to 13 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 CPSI has significant positive skewness in it's return distribution. This indicates that investors can expect CPSI to recover from drawdowns quickly. Which makes CPSI 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 CPSI. Therefore, SP500 must receive a lower allocation than CPSI in your portfolio. CPSI usually has shorter drawdown period than the SP500 index.

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

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