21.73 +0.22 (+1.02%) Buy

PFSI continues to mint money for it's investors

13 min read

PENNYMAC FINANCIAL SERVICES, INC. outperformed the broader market today. It increased by +1.02% to close at 21.73. During the last week it increased by +5.9% and saw a maximum drawdown of -3.41% before bouncing back.

[Themes containing PFSI]

Buy-and-Hold investors in PFSI experienced a maximum drawdown of -11.11% over the last three months. It increased by +1.31% during this bullish trending period. There were both Long and Short signals during this period, while the long signals were marginally more profitable than the short signals.


PFSI has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 8 Jul, 2016 to 16 Feb, 2018. Over the last 2 years 11 months and 7 days, PFSI outperformed the SP500 index on 50% days. Which indicates that on days PFSI outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months PFSI was mostly profitable and delivered on average +0.05% per day. It's best return during this period (of +8.34%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -7.65%) was on Tuesday, 4 Dec, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +12.2%) started on 28 Nov, 2018 and went on till 3 Dec, 2018 while the bearish trend (which returned -4.66%) started on 17 Oct, 2018 and went on till 22 Oct, 2018.

The last 12 months saw PFSI's investors making profits in 4 months and incurring losses in 8 months. PFSI was less consistent in delivering monthly returs than SP500 index. PFSI significantly outperformed SP500 index in Aug 2018, when it returned +10.44% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. PFSI had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Mar 2018 to Jul 2018) during which period it delivered -19.64%.

Empty pockets never held anyone back. Only empty heads and empty hearts can do that.
-- Norman Vincent Peale

PFSI 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 PFSI's volatility from 20 Sep, 2018 to 10 Dec, 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 PFSI has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

On a general note (since you are interested in PFSI), PFE is a large cap that deserves to be closely tracked for investment opportunities.

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