43.83 +0.31 (+0.71%) Sell

FARO investors looking to add more to current positions

13 min read

FARO TECHNOLOGIES INC delivered stellar performance on Friday. It gained +0.71% to close at 43.83. On a day when the overall market breadth was 35%, it closed higher than 68% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing FARO]

Buy-and-Hold investors in FARO experienced a maximum drawdown of -33.66% over the last three months. It returned -31.78% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +31.78% for investors.


FARO has been underperforming the SP500 index in recent time, after having outperformed till 27 Jul, 2018. Over the last 2 years 11 months and 10 days, FARO outperformed the SP500 index on 50% days. Which indicates that on days FARO outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

FARO returned losses on 61% days in the last three months. During this time, it delivered on average -0.56% per day. It delivered it's worst daily return of -8.96%, during this period, on Thursday, 1 Nov, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -20.24% losses to investors. This was followed by a bullish trend that started on 5 Nov, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +10.74% to investors.

On monthly basis, FARO delivered profits and losses in equal number of months. FARO delivered profits less regularly than SP500 index. FARO was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -19.61% compared to -7.28% returned by SP500 index in Oct 2018. FARO had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both FARO and SP500 index significantly outperform during months when quarterly/annual results are announced.

If you took our top fifteen decisions out, we'd have a pretty average record. It wasn't hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor.
-- Charlie Munger

FARO 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 FARO's volatility from 18 Sep, 2018 to 5 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 FARO has significant positive skewness in it's return distribution. This indicates that investors can expect FARO to recover from drawdowns quickly. Which makes FARO 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 FARO. Therefore, SP500 must receive a lower allocation than FARO in your portfolio. SP500 index usually has shorter drawdown period than FARO.

On a general note (since you are interested in FARO), MSFT is a large cap that deserves to be closely tracked for investment opportunities.

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