PDS is a falling knife, continues to bleed every investor trying to catch it
13 Dec, 201813 min read
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PRECISION DRILLING CORP (Foreign) was among the worst performers today. It delivered -0.51% to close at 1.97. It's recent 5 day performance has been +4.76%, -3.08%, -7.58%, +0.48% and -3.23%.
PDS showed a strong bearish trend over the last 3 months. During this period PDS delivered -44.97% and saw a maximum drawdown of -50.13%. There was a short signal during this period which returned +41.02%.
PDS has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 8 Jun, 2016 to 11 Dec, 2018. Over the last 2 years 11 months and 9 days, PDS underperformed the SP500 index on 53% days.
During the last three months PDS was mostly loss making and delivered on average -0.91% per day. It's best return during this period (of +9.8%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -7.58%) was on Monday, 10 Dec, 2018. The longest stort-term trend during this period was 12 losing days, which started on 10 Oct, 2018 and ended on 25 Oct, 2018. This bearish trend lost -29.04% of investor capital.
The last 12 months saw PDS's investors making profits in 4 months and incurring losses in 8 months. PDS was less consistent in delivering monthly returs than SP500 index. PDS significantly outperformed SP500 index in Apr 2018, when it returned +34.34% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. PDS had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -61.1%. It is interesting to note that both PDS and SP500 index significantly outperform during months when quarterly/annual results are announced.
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PDS 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 PDS's volatility from 18 Sep, 2018 to 10 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that PDS has significant negative skewness in it's return distribution. This indicates that PDS is very risky for short-term investment and can significantly underperform for long durations.
PDS has more chance of extreme outcomes than the SP500 index. Therefore, PDS must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than PDS.
On a general note (since you are interested in PDS), three large cap instruments that deserve special mention are MSFT, CSCO and UNH. They have all outperformed the market and must be closely watched for investment opportunities.
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