53.8 -1.2 (-2.24%) Sell

Prayers for EE investors as it significantly underperforms

13 min read

EL PASO ELECTRIC CO was among the worst performers on Monday. It delivered -2.24% to close at 53.8. It is currently trading -15% below it's 52 week high of 63.9.

[Themes containing EE]

EE is currently in a bearish trend. Over the last three months 3 bearish signals have generated a profit of +1.48% for investors.


EE has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 16 Nov, 2017 to 9 Mar, 2018. Over the last 2 years 11 months and 10 days, EE outperformed the SP500 index on 54% days.

During the last three months EE delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +4.2%) was on Tuesday, 2 Oct, 2018. While it's worst loss in the same period (of -3.91%) was on Thursday, 6 Dec, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 7 Nov, 2018 and went on till 13 Nov, 2018. This bullish trend returned +1.56% to investors.

The last 12 months saw EE's investors making profits in 6 months and incurring losses in 6 months. EE was less consistent in delivering monthly returs than SP500 index. EE significantly outperformed SP500 index in May 2018, when it returned +14.79% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. EE had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both EE and SP500 index significantly outperform during months when quarterly/annual results are announced.

It takes as much energy to wish as it does to plan.
-- Eleanor Roosevelt

EE 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 EE's volatility from 19 Sep, 2018 to 28 Sep, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that EE 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.

EE has more chance of extreme outcomes than the SP500 index. Therefore, EE must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than EE.

On a general note (since you are interested in EE), three small cap instruments that deserve special mention are PTC, BURL and KEYS. They have all outperformed the market and must be closely watched for investment opportunities.

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