SANDERSON FARMS INC

96.41 -2.03 (-2.1%) Sell

Don't invest in SAFM now, it is a high risk investment

13 min read

SAFM delivered massive losses today. On a longer term basis, investors in SANDERSON FARMS INC made +0.06% per day. Monday's performance of -2.1% was a significant underperformance compared to it's daily average.

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SAFM showed a down trend over the last 3 months. During this period SAFM lost -4.23% and saw a maximum drawdown of -14.8%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SAFM till volatility reduces and a clear trend emerges.

Trend

SAFM has been underperforming the SP500 index in recent time, after having outperformed till 4 Dec, 2017. Over the last 2 years 11 months and 10 days, SAFM outperformed the SP500 index on 54% days.

During the last three months SAFM delivered profits on 53% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.85%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -6.64%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 9 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -6.74% losses to investors. This was followed by a bullish trend that started on 14 Nov, 2018 and ended on 19 Nov, 2018. This bullish trend delivered +6.78% to investors.

SAFM had 3 profitable and 9 loss making months over the last year. During the last year, SAFM underperformed SP500 index on monthly return basis. SAFM significantly outperformed SP500 index in Nov 2018, when it returned +15.01% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SAFM had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jan 2018 to May 2018) during which period it delivered -28.96%.

"You have venture capitalists. We view them as experts who also help finance your company and give directions and also some pretty candid discussions about what you have to do better.

SAFM is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in SAFM's volatility from 21 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SAFM has significant positive skewness in it's return distribution. This indicates that investors can expect SAFM to recover from drawdowns quickly. Which makes SAFM 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 SAFM. Therefore, SP500 must receive a lower allocation than SAFM in your portfolio. SAFM usually has shorter drawdown period than the SP500 index.

Based on your interest in SAFM you may find it interesting to know that PTC, KEYS and BURL are small caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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