FRANKLIN ELECTRIC CO INC

41.29 +0.28 (+0.68%) Sell

Joy for FELE investors as it shows marginal outperformance

13 min read

FRANKLIN ELECTRIC CO INC ranked among the best performers on Tuesday. It delivered +0.68% to close at 41.29. On a day when the overall market breadth was 35%, it closed higher than 70% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing FELE]

Buy-and-Hold investors in FELE experienced a maximum drawdown of -22.39% over the last three months. It delivered -15.73% during this strong 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. The net profit from Short signals was +5.08%.

Trend

FELE has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 11 Jan, 2016 to 7 Dec, 2016. Over the last 2 years 11 months and 7 days, FELE outperformed the SP500 index on 51% days.

During the last three months FELE was mostly loss making and delivered on average -0.25% per day. It's best return during this period (of +4.51%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -5.92%) was on Tuesday, 4 Dec, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +4.13%) started on 12 Sep, 2018 and went on till 18 Sep, 2018 while the bearish trend (which returned -4.43%) started on 8 Nov, 2018 and went on till 14 Nov, 2018.

The last 12 months saw FELE's investors making profits in 6 months and incurring losses in 6 months. FELE was less consistent in delivering monthly returs than SP500 index. FELE was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -13.58% compared to -7.28% returned by SP500 index in Oct 2018. FELE had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both FELE and SP500 index significantly outperform during months when quarterly/annual results are announced.

Making money from enforcing patents is no more wrong than investing in preferred stock.
-- Nathan Myhrvold

FELE 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 FELE's volatility from 12 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that FELE 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 FELE. Therefore, SP500 must receive a lower allocation than FELE in your portfolio. SP500 index usually has shorter drawdown period than FELE.

On a general note (since you are interested in FELE), three mid cap instruments that deserve special mention are SQ, ABMD and AMD. They have all outperformed the market and must be closely watched for investment opportunities.

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