55.41 +1.03 (+1.86%) Sell

TCBI investors update their stop-losses higher

13 min read

TEXAS CAPITAL BANCSHARES INC was among the best performers today. It returned +1.86% to close at 55.41. During the last week it lost -0.77% and saw a maximum drawdown of -2.58% before bouncing back.

[Themes containing TCBI]

Buy-and-Hold investors in TCBI experienced a maximum drawdown of -38.64% over the last three months. It lost -36.09% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +36.09% for investors.


TCBI has been underperforming the SP500 index in recent time, after having outperformed till 11 May, 2018. Over the last 2 years 11 months and 8 days, TCBI underperformed the SP500 index on 50% days. Which indicates that on days TCBI underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months TCBI was mostly loss making and delivered on average -0.68% per day. It's best return during this period (of +3.75%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -12.79%) was on Thursday, 18 Oct, 2018. There was initially a bearish trend during this period which started on 26 Sep, 2018 and went on till 2 Oct, 2018. The trend delivered -8.35% losses to investors. This was followed by a bullish trend that started on 28 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +3.24% to investors.

TCBI had 2 profitable and 10 loss making months over the last year. During the last year, TCBI underperformed SP500 index on monthly return basis. TCBI was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -19.57% compared to -7.28% returned by SP500 index in Oct 2018. TCBI had a longer winning streak of losing months than SP500 index. It went down in 8 straight months (from May 2018 to Dec 2018) during which period it delivered -52.69%. It is interesting to note that both TCBI and SP500 index significantly outperform during months when quarterly/annual results are announced.

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

TCBI is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in TCBI's volatility from 18 Sep, 2018 to 24 Oct, 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 TCBI has significant positive skewness in it's return distribution. This indicates that investors can expect TCBI to recover from drawdowns quickly. Which makes TCBI 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 TCBI. Therefore, SP500 must receive a lower allocation than TCBI in your portfolio. SP500 index usually has shorter drawdown period than TCBI.

On a general note (since you are interested in TCBI), three instruments that have performed similar to TCBI are BPOP, GDI and CVCO. They must all be evaluated as alternative investment options and for diversification.

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