HNI investors update their stop-losses higher
12 Dec, 201813 min read
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HNI CORP delivered good returns today. It grew by +1.74% to close at 35.71. During the last week it lost -0.14% and saw a maximum drawdown of -1.85% before bouncing back.
Buy-and-Hold investors in HNI experienced a maximum drawdown of -20.95% over the last three months. It lost -16.49% 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 +14.01%.
HNI has been underperforming the SP500 index in recent time, after having outperformed till 2 Sep, 2016. Over the last 2 years 11 months and 8 days, HNI underperformed the SP500 index on 47% days. Which indicates that on days HNI underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months HNI was mostly loss making and delivered on average -0.27% per day. It's best return during this period (of +3.95%) was on Friday, 21 Sep, 2018. While it's worst loss in the same period (of -5.36%) was on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 20 Sep, 2018 and went on till 25 Sep, 2018. The bullish trend returned +6.17% to investors. This was followed by a bearish trend that started on 3 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -9.19% of investor capital.
HNI had 6 profitable and 6 loss making months over the last year. During the last year, HNI underperformed SP500 index on monthly return basis. HNI significantly outperformed SP500 index in Jul 2018, when it returned +15.33% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. HNI had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.
I'm only rich because I know when I'm wrong..I basically have survived by recognizing my mistakes.
-- George Soros
HNI 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 HNI's volatility from 13 Sep, 2018 to 23 Oct, 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 HNI has significant positive skewness in it's return distribution. This indicates that investors can expect HNI to recover from drawdowns quickly. Which makes HNI 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 HNI. Therefore, SP500 must receive a lower allocation than HNI in your portfolio. HNI usually has shorter drawdown period than the SP500 index.
On a general note (since you are interested in HNI), two small cap instruments that deserve special mention are BURL and EHC. They have significantly outperformed the overall market.
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