24.17 -1.02 (-4.2%) Buy

GHL investors herd to book profits while the going is good

13 min read

GREENHILL & CO INC ranked among the worst performers on Friday. It lost -4.2% to close at 24.17. On a day when the overall market breadth was 35%, it closed higher than 82% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing GHL]

GHL showed a down trend over the last 3 months. During this period GHL lost -8.96% and saw a maximum drawdown of -24.64%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in GHL till volatility reduces and a clear trend emerges.


GHL has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, GHL underperformed the SP500 index on 51% days.

During the last three months GHL delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +6.87%) was on Thursday, 15 Nov, 2018. While it's worst loss in the same period (of -5.96%) was on Thursday, 25 Oct, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +4.46% to investors. This was followed by a bearish trend that started on 18 Oct, 2018 and ended on 26 Oct, 2018. This bearish trend lost -21.52% of investor capital.

GHL had 7 profitable and 5 loss making months over the last year. During the last year, GHL underperformed SP500 index on monthly return basis. GHL significantly outperformed SP500 index in May 2018, when it returned +29.8% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GHL had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

Believe you can and you're halfway there.
-- Theodore Roosevelt

GHL 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 GHL's volatility from 2 Oct, 2018 to 15 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

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

On a general note (since you are interested in GHL), three instruments that deserve special mention are SBOT, AYTU and AMRH. They have all outperformed the market and must be closely watched for investment opportunities.

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