Don't even consider investing in LBRDA now, it is a high risk investment
11 Dec, 201813 min read
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LIBERTY BROADBAND CORP is a falling knife that can bleed you if you catch it on Tuesday. It fell by -0.79% to close at 79.52. It is currently trading -17% below it's 52 week high of 96.16.
LBRDA showed a bearish trend over the last 3 months. During this period LBRDA fell by -3.68% and saw a maximum drawdown of -9.79%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in LBRDA till volatility reduces and a clear trend emerges.
LBRDA has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 11 Feb, 2016 to 14 Aug, 2017. Over the last 2 years 11 months and 7 days, LBRDA outperformed the SP500 index on 53% days.
During the last three months LBRDA delivered profits on 51% days. However, it still managed to end this period in a loss. It's best return during this period (of +4.75%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -5.55%) was on Tuesday, 20 Nov, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 21 Nov, 2018 and went on till 30 Nov, 2018. This bullish trend returned +9.37% to investors.
During the last year LBRDA had 6 profitable months and 6 loss making months. LBRDA returned profits in fewer months than SP500 index. LBRDA was also a more risky investment than SP500 index as it's worst month in the last year, Apr 2018, returned -14.54% compared to -7.28% returned by SP500 index in Oct 2018. LBRDA had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both LBRDA and SP500 index significantly outperform during months when quarterly/annual results are announced.
You must gain control over your money or the lack of it will forever control you.
-- Dave Ramsey
LBRDA 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 LBRDA's volatility from 26 Sep, 2018 to 2 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 LBRDA has significant positive skewness in it's return distribution. This indicates that investors can expect LBRDA to recover from drawdowns quickly. Which makes LBRDA 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 LBRDA. Therefore, SP500 must receive a lower allocation than LBRDA in your portfolio. SP500 index usually has shorter drawdown period than LBRDA.
On a general note (since you are interested in LBRDA), three instruments that are extremely volatile are IX, NVCN and IMTE. They must all be evaluated prudently and investors are better off avoiding them at the moment.
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