9.09 -0.3 (-3.3%) Buy

KEYW investors herd to book profits while the going is good

13 min read

KEYW HOLDING CORP was among the worst performers on Tuesday. It fell by -3.3% to close at 9.09. On a day when the overall market breadth was 35%, it closed higher than 80% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing KEYW]

KEYW showed a bullish trend over the last 3 months. During this period KEYW increased by +2.25% and saw a maximum drawdown of -19.57%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in KEYW till volatility reduces and a clear trend emerges.


KEYW has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 7 Dec, 2016 to 7 Dec, 2017. Over the last 2 years 11 months and 7 days, KEYW outperformed the SP500 index on 52% days.

During the last three months KEYW delivered losses on 53% days. However, it still managed to end this period in a profit. It's best return during this period (of +7.71%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -6.47%) was on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 8 profitable days, which started on 30 Oct, 2018 and went on till 8 Nov, 2018. This bullish trend returned +23.14% to investors.

During the last year KEYW had 7 profitable months and 5 loss making months. KEYW returned profits in fewer months than SP500 index. KEYW significantly outperformed SP500 index in Nov 2018, when it returned +24.78% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. KEYW had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.

Frugality includes all the other virtues.
-- Cicero

KEYW is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in KEYW's volatility from 5 Oct, 2018 to 6 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

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

On a general note (since you are interested in KEYW), three small cap instruments that deserve special mention are ZBRA, EHC and HQY. They have all outperformed the market and must be closely watched for investment opportunities.

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