Don't buy DIN now, it is an investor's nightmare
14 Dec, 201813 min read
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DINE BRANDS GLOBAL, INC. delivered massive losses on Friday. It lost -3.47% to close at 82.05. It is currently trading +68% above it's 52 week low of 48.77 and is down only -12% from it's 52 week high.
DIN showed a flat trend over the last 3 months. During this period DIN returned -0.27% and saw a maximum drawdown of -13.39%.
DIN has been underperforming the SP500 index in recent time, after having outperformed till 25 Feb, 2016. Over the last 2 years 11 months and 10 days, DIN underperformed the SP500 index on 50% days. Which indicates that on days DIN underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
DIN was profitable on 50% days in the last three months. During this time, it delivered on average +0.03% per day. It delivered it's worst daily return of -6.49%, during this period, on Tuesday, 11 Dec, 2018. There was initially a bearish trend during this period which started on 23 Oct, 2018 and went on till 29 Oct, 2018. The trend delivered -9.72% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 5 Nov, 2018. This bullish trend delivered +17.71% to investors.
DIN had 7 profitable and 5 loss making months over the last year. During the last year, DIN underperformed SP500 index on monthly return basis. DIN significantly outperformed SP500 index in Feb 2018, when it returned +37.2% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. DIN 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 DIN and SP500 index significantly outperform during months when quarterly/annual results are announced.
"You and I come by road or rail, but economists travel on infrastructure.
DIN 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 DIN's volatility from 27 Sep, 2018 to 31 Oct, 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 DIN 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 DIN. Therefore, SP500 must receive a lower allocation than DIN in your portfolio. SP500 index usually has shorter drawdown period than DIN.
On a general note (since you are interested in DIN), if you are an investor in NVCN, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.
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