18.83 -0.45 (-2.38%) Buy

Looking to invest in SBH? Look for alternatives because it trailed the broader market

13 min read

SALLY BEAUTY HOLDINGS, INC. was among the worst performers on Thursday. It fell by -2.38% to close at 18.83. On a day when the overall market breadth was 35%, it closed higher than 68% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing SBH]

SBH showed a bullish trend over the last 3 months. During this period SBH delivered +5.43% and saw a maximum drawdown of -16.64%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SBH till volatility reduces and a clear trend emerges.


SBH has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 8 Feb, 2016 to 6 Aug, 2018. Over the last 2 years 11 months and 9 days, SBH underperformed the SP500 index on 49% days. Which indicates that on days SBH underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months SBH delivered losses on 53% days. However, it still managed to end this period in a profit. It's best return during this period (of +20.22%) was on Thursday, 8 Nov, 2018. While it's worst loss in the same period (of -7.15%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 3 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -9.23% of investor capital.

During the last year SBH had 6 profitable months and 6 loss making months. SBH returned profits in fewer months than SP500 index. SBH significantly outperformed SP500 index in Sep 2018, when it returned +19.42% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SBH had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both SBH and SP500 index significantly outperform during months when quarterly/annual results are announced.

Time is more value than money. You can get more money, but you cannot get more time.
-- Jim Rohn

SBH is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in SBH's volatility from 25 Sep, 2018 to 8 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 SBH has significant positive skewness in it's return distribution. This indicates that investors can expect SBH to recover from drawdowns quickly. Which makes SBH 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 SBH. Therefore, SP500 must receive a lower allocation than SBH in your portfolio. SP500 index usually has shorter drawdown period than SBH.

On a general note (since you are interested in SBH), three large cap instruments that deserve special mention are UNH, AMZN and PFE. They have all outperformed the market and must be closely watched for investment opportunities.

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