5.79 -0.25 (-4.3%) Sell

The party never started for FSIC investors as it delivered massive losses

13 min read

FS INVESTMENT CORP significantly underperformed on Tuesday. It returned -4.3% to close at 5.79. 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 FSIC]

Buy-and-Hold investors in FSIC experienced a maximum drawdown of -22.28% over the last three months. It returned -22.28% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +22.28% for investors.


FSIC has been underperforming the SP500 index in recent time, after having outperformed till 25 Nov, 2016. Over the last 2 years 11 months and 7 days, FSIC underperformed the SP500 index on 52% days.

FSIC returned losses on 70% days in the last three months. During this time, it delivered on average -0.4% per day. It delivered it's worst daily return of -4.3%, during this period, on Tuesday, 11 Dec, 2018. There was initially a bearish trend during this period which started on 16 Oct, 2018 and went on till 29 Oct, 2018. The trend delivered -8.69% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +3.18% to investors.

On monthly basis, FSIC delivered losses in more months over the last year, than profits. FSIC delivered profits less regularly than SP500 index. FSIC was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.4% compared to -7.28% returned by SP500 index in Oct 2018. FSIC had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Aug 2018 to Dec 2018) during which period it delivered -32.48%. It is interesting to note that both FSIC and SP500 index significantly outperform during months when quarterly/annual results are announced.

Glamour is what I sell, it's my stock in trade.
-- Marlene Dietrich

FSIC 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 FSIC's volatility from 13 Sep, 2018 to 8 Nov, 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 FSIC has significant positive skewness in it's return distribution. This indicates that investors can expect FSIC to recover from drawdowns quickly. Which makes FSIC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in FSIC you may find it interesting to know that BURL, HQY and ZBRA are small caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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