GBDC is a falling knife, continues to bleed every investor trying to catch it

GOLUB CAPITAL BDC, INC. was among the worst performers on Tuesday. It fell by -1.75% to close at 17.93. It is currently trading -6% below it's 52 week high of 19.14.

[Themes containing GBDC]

GBDC is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for GBDC's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -4.73%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to GBDC.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

GBDC has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 30 Aug, 2016 to 20 Sep, 2018. Over the last 2 years 11 months and 7 days, GBDC underperformed the SP500 index on 48% days. Which indicates that on days GBDC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

GBDC returned losses on 55% 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 +2.21%, during this period, on Wednesday, 28 Nov, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +4.01%) started on 25 Oct, 2018 and went on till 1 Nov, 2018 while the bearish trend (which returned -2.65%) started on 17 Oct, 2018 and went on till 24 Oct, 2018.

During the last year GBDC had 6 profitable months and 6 loss making months. GBDC returned profits in fewer months than SP500 index. GBDC was also a less risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -3.13% compared to -7.28% returned by SP500 index in Oct 2018. GBDC had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both GBDC and SP500 index significantly outperform during months when quarterly/annual results are announced.

"My father, being a Scotsman, taught me to look after finances. I'm shrewd. Some people may call me tight.

GBDC is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in GBDC's volatility from 26 Sep, 2018 to 29 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 GBDC has significant positive skewness in it's return distribution. This indicates that investors can expect GBDC to recover from drawdowns quickly. Which makes GBDC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in GBDC), two small cap instruments that deserve special mention are EHC and HQY. They have significantly outperformed the overall market.