ENERGY TRANSFER EQUITY, L.P. ranked among the worst performers on Thursday. It fell by -1.52% to close at 16.82. On a day when the overall market breadth was 35%, it closed higher than 79% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
ETE showed a bearish trend over the last 3 months. During this period ETE fell by -2.89% and saw a maximum drawdown of -7.02%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ETE till volatility reduces and a clear trend emerges.
ETE has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 8 Feb, 2016 to 6 Jan, 2017. Over the last 2 years 9 months and 14 days, ETE underperformed the SP500 index on 52% days.
ETE returned losses on 59% days in the last three months. During this time, it delivered on average -0.11% per day. It delivered it's best daily return of +3.79%, during this period, on Monday, 1 Oct, 2018. The longest stort-term trend during this period was 5 losing days, which started on 2 Oct, 2018 and ended on 8 Oct, 2018. This bearish trend lost -4.39% of investor capital.
During the last year ETE had 4 profitable months and 8 loss making months. ETE returned profits in fewer months than SP500 index. ETE was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -15.3% compared to -5.33% returned by SP500 index in Oct 2018. ETE had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -11.32%. It is interesting to note that both ETE and SP500 index significantly outperform during months when quarterly/annual results are announced.
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ETE is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing decrease in volatility. During the last three months, there was a significant surge in ETE's volatility from 20 Sep, 2018 to 18 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 12 Oct, 2018.
Advanced/professional short-term investors should note that ETE has significant positive skewness in it's return distribution. This indicates that investors can expect ETE to recover from drawdowns quickly. Which makes ETE a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in ETE derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
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