FRPT investors dump it for better alternatives
07 Dec, 201813 min read
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FRESHPET, INC. delivered massive losses on Friday. It lost -2.43% to close at 31.72. 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 -0.0233%.
Buy-and-Hold investors in FRPT experienced a maximum drawdown of -19.06% over the last three months. It lost -11.15% 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 +2.58%.
FRPT has been underperforming the SP500 index in recent time, after having outperformed till 30 Oct, 2018. Over the last 2 years 11 months and 3 days, FRPT outperformed the SP500 index on 52% days.
During the last three months FRPT was mostly loss making and delivered on average -0.16% per day. It's best return during this period (of +6.18%) was on Thursday, 8 Nov, 2018. While it's worst loss in the same period (of -6.21%) was on Monday, 19 Nov, 2018. There was initially a bullish trend during this period which started on 20 Sep, 2018 and went on till 26 Sep, 2018. The bullish trend returned +8.18% to investors. This was followed by a bearish trend that started on 31 Oct, 2018 and ended on 6 Nov, 2018. This bearish trend lost -12.73% of investor capital.
FRPT had 7 profitable and 5 loss making months over the last year. During the last year, FRPT underperformed SP500 index on monthly return basis. FRPT significantly outperformed SP500 index in Aug 2018, when it returned +28.1% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. FRPT had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.
If you are standing on the platform when the train has pulled away, It's not going to back up for you. When a bull market takes off, It's not going to back up for you.
-- Don Connelly
FRPT 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 fall in FRPT's volatility from 12 Sep, 2018 to 2 Oct, 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 FRPT 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 FRPT. Therefore, SP500 must receive a lower allocation than FRPT in your portfolio. SP500 index usually has shorter drawdown period than FRPT.
On a general note (since you are interested in FRPT), two instruments that have delivered similar performance as FRPT are DS and SSI. They are suitable as good alternative investment candidates that can diversify your portfolio.
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