F5 NETWORKS INC

167.29 +0.1 (+0.06%) Sell

Profit booking on the minds of FFIV investors as it marginally outperforms

13 min read

F5 NETWORKS INC managed to marginally outperform the broader market on Tuesday. It gained +0.06% to close at 167.29. On a day when the overall market breadth was 35%, it closed higher than 13% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing FFIV]

Buy-and-Hold investors in FFIV experienced a maximum drawdown of -18.96% over the last three months. It returned -12.99% during this strong down 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 +9.5%.

Trend

FFIV has been underperforming the SP500 index in recent time, after having outperformed till 28 Sep, 2018. Over the last 2 years 11 months and 7 days, FFIV outperformed the SP500 index on 55% days.

FFIV returned losses on 55% days in the last three months. During this time, it delivered on average -0.2% per day. It delivered it's best daily return of +6.11%, during this period, on Thursday, 25 Oct, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -18.84% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +11.7% to investors.

On monthly basis, FFIV delivered profits and losses in equal number of months. FFIV delivered profits less regularly than SP500 index. FFIV significantly outperformed SP500 index in Apr 2018, when it returned +15.91% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. FFIV had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered -12.78%. It is interesting to note that both FFIV and SP500 index significantly outperform during months when quarterly/annual results are announced.

Investment philosophy is the clear understanding that by owning shares of stocks he owns businesses, not pieces of paper.
-- Warren Edward Buffett

FFIV is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in FFIV's volatility from 13 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that FFIV has significant positive skewness in it's return distribution. This indicates that investors can expect FFIV to recover from drawdowns quickly. Which makes FFIV a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in FFIV derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in FFIV you may find it interesting to know that ECYT and AMRN have both shown remarkable performance this year and deserve to be on every investors' watchlist.

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