47.97 -0.71 (-1.48%) Sell

Don't buy FN now, it is a risky investment

13 min read

FABRINET significantly underperformed on Friday. It lost -1.48% to close at 47.97. On a day when the overall market breadth was 35%, it closed higher than 5% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing FN]

FN showed a up trend over the last 3 months. During this period FN gained +3.09% and saw a maximum drawdown of -12.01%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in FN till volatility reduces and a clear trend emerges.


FN has been underperforming the SP500 index in recent time, after having outperformed till 21 Feb, 2017. Over the last 2 years 11 months and 3 days, FN outperformed the SP500 index on 52% days.

FN returned losses on 61% days in the last three months. During this time, it delivered on average +0.08% per day. It delivered it's best daily return of +10.62%, during this period, on Tuesday, 6 Nov, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -8.49% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +12.17% to investors.

FN had 7 profitable and 5 loss making months over the last year. During the last year, FN underperformed SP500 index on monthly return basis. FN significantly outperformed SP500 index in May 2018, when it returned +24.53% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. FN had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

"Stay on top of your finances. Don't leave that up to others.

FN 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 FN's volatility from 20 Sep, 2018 to 7 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

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

On a general note (since you are interested in FN), if you are evaluating FN as an investment candidate, then you should read about CLPR which has delivered similar performance and can help diversify your portfolio.

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