QSR is a falling knife, continues to bleed every investor trying to catch it
14 Dec, 201813 min read
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RESTAURANT BRANDS INTERNATIONAL INC. was among the worst performers on Friday. It fell by -2.33% to close at 53.28. It is currently trading -18% below it's 52 week high of 65.1.
QSR showed a bearish trend over the last 3 months. During this period QSR fell by -8.12% and saw a maximum drawdown of -13.11%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in QSR till volatility reduces and a clear trend emerges.
QSR has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 9 Feb, 2016 to 19 Oct, 2017. Over the last 2 years 11 months and 10 days, QSR outperformed the SP500 index on 51% days.
During the last three months QSR was mostly loss making and delivered on average -0.12% per day. It's best return during this period (of +4.6%) was on Wednesday, 21 Nov, 2018. While it's worst loss in the same period (of -4.31%) was on Friday, 7 Dec, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +4.36%) started on 17 Sep, 2018 and went on till 20 Sep, 2018 while the bearish trend (which returned -2.91%) started on 1 Oct, 2018 and went on till 4 Oct, 2018.
During the last year QSR had 5 profitable months and 7 loss making months. QSR returned profits in fewer months than SP500 index. QSR was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -9.08% compared to -7.28% returned by SP500 index in Oct 2018. QSR had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jan 2018 to Apr 2018) during which period it delivered -12.72%.
Outcome is simply the final score: Who won the game; what numbers came up in a roll of the dice; how high did a stock go. Outcome is the result, regardless of the method used to achieve it. It is not controllable.
-- Barry Ritholtz
QSR 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 QSR's volatility from 17 Sep, 2018 to 11 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 QSR 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.
QSR has more chance of extreme outcomes than the SP500 index. Therefore, QSR must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than QSR.
Based on your interest in QSR you may find it interesting to know that BFB and GS have both performed similar to QSR and can be considered by investors as alternative investment options.
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