46.82 -0.63 (-1.35%) Sell

Stop-loss on the minds of KHC investors as it significantly underperforms

13 min read

KRAFT HEINZ CO significantly underperformed on Monday. It lost -1.35% to close at 46.82. On a day when the overall market breadth was 34%, it closed higher than 10% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing KHC]

Buy-and-Hold investors in KHC experienced a maximum drawdown of -18.67% over the last three months. It lost -17.7% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +17.7% for investors.


KHC has been underperforming the SP500 index in recent time, after having outperformed till 6 Jul, 2016. Over the last 2 years 11 months and 10 days, KHC underperformed the SP500 index on 51% days.

KHC returned losses on 55% days in the last three months. During this time, it delivered on average -0.3% per day. It delivered it's worst daily return of -9.73%, during this period, on Friday, 2 Nov, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 27 Sep, 2018. The trend delivered -4.47% losses to investors. This was followed by a bullish trend that started on 12 Oct, 2018 and ended on 17 Oct, 2018. This bullish trend delivered +4.71% to investors.

KHC had 3 profitable and 9 loss making months over the last year. During the last year, KHC underperformed SP500 index on monthly return basis. KHC was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -14.47% compared to -7.28% returned by SP500 index in Oct 2018. KHC had a longer winning streak of losing months than SP500 index. It went down in 6 straight months (from Jul 2018 to Dec 2018) during which period it delivered -26.86%. It is interesting to note that both KHC and SP500 index significantly outperform during months when quarterly/annual results are announced.

Financial support is one thing, but I always think what becomes really sacrificial is your time.
-- Cliff Richard

KHC 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 KHC's volatility from 19 Sep, 2018 to 5 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that KHC has significant negative skewness in it's return distribution. This indicates that KHC is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in KHC you may find it interesting to know that AYTU and AMRH have both shown remarkable performance and deserve to be on every investors' watchlist.

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