MAXIMUS INC

69.95 -0.37 (-0.53%) Buy

Don't buy MMS now, it is underperforming the market

13 min read

MAXIMUS INC was among the worst performers on Thursday. It fell by -0.53% to close at 69.95. On a day when the overall market breadth was 35%, it closed higher than 13% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing MMS]

MMS showed a bullish trend over the last 3 months. During this period MMS surged by +5.6% and saw a maximum drawdown of -6.72%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MMS till volatility reduces and a clear trend emerges.

Trend

MMS has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 20 Jan, 2016 to 4 Oct, 2018. Over the last 2 years 11 months and 9 days, MMS underperformed the SP500 index on 48% days. Which indicates that on days MMS underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

MMS returned losses on 54% days in the last three months. During this time, it delivered on average +0.1% per day. It delivered it's best daily return of +4.79%, during this period, on Wednesday, 21 Nov, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +4.63%) started on 12 Oct, 2018 and went on till 17 Oct, 2018 while the bearish trend (which returned -3.45%) started on 4 Dec, 2018 and went on till 10 Dec, 2018.

During the last year MMS had 6 profitable months and 6 loss making months. MMS returned profits in fewer months than SP500 index. MMS was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -9.95% compared to -7.28% returned by SP500 index in Oct 2018. MMS had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both MMS and SP500 index significantly outperform during months when quarterly/annual results are announced.

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MMS 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 MMS's volatility from 14 Sep, 2018 to 23 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 MMS has significant positive skewness in it's return distribution. This indicates that investors can expect MMS to recover from drawdowns quickly. Which makes MMS 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 MMS. Therefore, SP500 must receive a lower allocation than MMS in your portfolio. MMS usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in MMS), two small cap instruments that deserve special mention are AAXN and ZBRA. They have significantly outperformed the overall market.

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