60.96 -1.17 (-1.91%) Buy

EBS investors re-evaluating their investment strategy

13 min read

EMERGENT BIOSOLUTIONS INC. was among the worst performers on Friday. It delivered -1.91% to close at 60.96. It is currently trading +37% above it's 52 week low of 44.44 and is down only -16% from it's 52 week high.

[Themes containing EBS]

Buy-and-Hold investors in EBS experienced a maximum drawdown of -16.77% over the last three months. It delivered -6.06% 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.


EBS has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 3 Apr, 2017 to 23 Nov, 2018. Over the last 2 years 11 months and 10 days, EBS outperformed the SP500 index on 51% days.

During the last three months EBS delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +5.06%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -6.27%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 30 Oct, 2018 and went on till 7 Nov, 2018. This bullish trend returned +16.42% to investors.

The last 12 months saw EBS's investors making profits in 8 months and incurring losses in 4 months. During the last year, EBS and SP500 index had the same number of profitable months. EBS significantly outperformed SP500 index in Nov 2018, when it returned +19.04% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. EBS had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

Outcome is simply the final score: Who won the game; what numbers came up in a roll of the dice; how high did a stock go. Outcome is the result, regardless of the method used to achieve it. It is not controllable.
-- Barry Ritholtz

EBS 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 surge in EBS's volatility from 1 Oct, 2018 to 13 Dec, 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 EBS has significant positive skewness in it's return distribution. This indicates that investors can expect EBS to recover from drawdowns quickly. Which makes EBS 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 EBS. Therefore, SP500 must receive a lower allocation than EBS in your portfolio. SP500 index usually has shorter drawdown period than EBS.

Based on your interest in EBS you may find it interesting to know that TPNL, HEAR and PRQR have all shown remarkable performance this year and deserve to be on every investor's watchlist.

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