14.57 -0.39 (-2.67%) Sell

FOR investors disappointed by market underperformance

13 min read

FORESTAR GROUP INC. delivered massive losses on Friday. It returned -2.67% to close at 14.57. It is currently trading -44% below it's 52 week high of 26.35.

[Themes containing FOR]

Buy-and-Hold investors in FOR experienced a maximum drawdown of -42.66% over the last three months. It returned -41.84% 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 +39.42%.


FOR has been underperforming the SP500 index in recent time, after having outperformed till 1 Feb, 2018. Over the last 2 years 11 months and 3 days, FOR outperformed the SP500 index on 50% days. Which indicates that on days FOR outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months FOR was mostly loss making and delivered on average -0.84% per day. It's best return during this period (of +9.08%) was on Wednesday, 21 Nov, 2018. While it's worst loss in the same period (of -10.16%) was on Friday, 9 Nov, 2018. There was initially a bullish trend during this period which started on 18 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +0.8% to investors. This was followed by a bearish trend that started on 24 Sep, 2018 and ended on 1 Oct, 2018. This bearish trend lost -17.45% of investor capital.

On monthly basis, FOR delivered profits and losses in equal number of months. FOR delivered profits less regularly than SP500 index. FOR was also a more risky investment than SP500 index as it's worst month in the last year, Sep 2018, returned -17.51% compared to -7.28% returned by SP500 index in Oct 2018. FOR had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -52.01%. It is interesting to note that both FOR and SP500 index significantly outperform during months when quarterly/annual results are announced.

If you would be wealthy, think of saving as well as getting.
-- Benjamin Franklin

FOR 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 FOR's volatility from 11 Sep, 2018 to 21 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 FOR 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 FOR. Therefore, SP500 must receive a lower allocation than FOR in your portfolio. SP500 index usually has shorter drawdown period than FOR.

On a general note (since you are interested in FOR), three small cap instruments that deserve special mention are HQY, EHC and ZBRA. They have all outperformed the market and must be closely watched for investment opportunities.

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