12.22 -0.24 (-2.0%) Sell

Looking to invest in PFLT? Avoid at the moment as it significantly underperformed

13 min read

PENNANTPARK FLOATING RATE CAPITAL LTD. significantly underperformed on Thursday. It fell by -2.0% to close at 12.22. On a day when the overall market breadth was 35%, it closed higher than 18% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing PFLT]

PFLT showed a bearish trend over the last 3 months. During this period PFLT fell by -7.77% and saw a maximum drawdown of -8.6%. There were 2 short signals during this period that returned a cumulative of +3.07% to investors.


PFLT has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 1 Dec, 2016 to 8 Oct, 2018. Over the last 2 years 11 months and 9 days, PFLT underperformed the SP500 index on 50% days. Which indicates that on days PFLT underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months PFLT was mostly loss making and delivered on average -0.12% per day. It's best return during this period (of +1.99%) was on Friday, 16 Nov, 2018. While it's worst loss in the same period (of -2.42%) was on Tuesday, 20 Nov, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +1.43%) started on 11 Oct, 2018 and went on till 16 Oct, 2018 while the bearish trend (which returned -1.64%) started on 24 Sep, 2018 and went on till 27 Sep, 2018.

During the last year PFLT had 6 profitable months and 6 loss making months. PFLT returned profits in fewer months than SP500 index. PFLT was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -8.97% compared to -7.28% returned by SP500 index in Oct 2018. PFLT had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

Opportunity is missed by most people because it is dressed in overalls and looks like work.
-- Thomas Edison

PFLT 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 PFLT's volatility from 26 Sep, 2018 to 21 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 PFLT has significant positive skewness in it's return distribution. This indicates that investors can expect PFLT to recover from drawdowns quickly. Which makes PFLT 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 PFLT. Therefore, SP500 must receive a lower allocation than PFLT in your portfolio. SP500 index usually has shorter drawdown period than PFLT.

On a general note (since you are interested in PFLT), three mid cap instruments that deserve special mention are SQ, ABMD and AMD. They have all outperformed the market and must be closely watched for investment opportunities.

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