35.4 -0.42 (-1.2%) Sell

Waiting to invest in SEP? Avoid at the moment as it ranked among the worst performers

13 min read

SPECTRA ENERGY PARTNERS, LP ranked among the worst performers on Friday. It delivered -1.2% to close at 35.4. It is currently trading -18% below it's 52 week high of 43.68.

[Themes containing SEP]

SEP showed a bearish trend over the last 3 months. During this period SEP delivered -6.6% and saw a maximum drawdown of -11.58%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SEP till volatility reduces and a clear trend emerges.


SEP has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 23 Feb, 2016 to 6 Jun, 2018. Over the last 2 years 11 months and 10 days, SEP underperformed the SP500 index on 51% days.

SEP was profitable on 50% days in the last three months. During this time, it delivered on average -0.1% per day. It delivered it's worst daily return of -4.24%, during this period, on Friday, 23 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 20 Sep, 2018 and ended on 26 Sep, 2018. This bearish trend lost -6.29% of investor capital.

The last 12 months saw SEP's investors making profits in 6 months and incurring losses in 6 months. SEP was less consistent in delivering monthly returs than SP500 index. SEP significantly outperformed SP500 index in Jun 2018, when it returned +17.52% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SEP had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both SEP and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Under capitalism, man exploits man. Under communism, it's just the opposite.

SEP 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 SEP's volatility from 9 Oct, 2018 to 29 Oct, 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 SEP has significant negative skewness in it's return distribution. This indicates that SEP is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in SEP you may find it interesting to know that NIHD, TPNL and PRQR have all shown remarkable performance this year and deserve to be on every investor's watchlist.

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