26.64 -0.05 (-0.19%) Sell

VRTV investors doing a reality check

13 min read

VERITIV CORP underperformed on Friday. It lost -0.19% to close at 26.64. On a day when the overall market breadth was 35%, it closed higher than 75% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing VRTV]

Buy-and-Hold investors in VRTV experienced a maximum drawdown of -43.74% over the last three months. It lost -43.74% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +43.38%.


VRTV has been underperforming the SP500 index in recent time, after having outperformed till 15 Mar, 2017. Over the last 2 years 11 months and 10 days, VRTV underperformed the SP500 index on 47% days. Which indicates that on days VRTV underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months VRTV was mostly loss making and delivered on average -0.82% per day. It's best return during this period (of +10.95%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -20.08%) was on Tuesday, 6 Nov, 2018. There was initially a bearish trend during this period which started on 18 Sep, 2018 and went on till 25 Sep, 2018. The trend delivered -22.85% losses to investors. This was followed by a bullish trend that started on 25 Oct, 2018 and ended on 30 Oct, 2018. This bullish trend delivered +17.11% to investors.

VRTV had 4 profitable and 8 loss making months over the last year. During the last year, VRTV underperformed SP500 index on monthly return basis. VRTV significantly outperformed SP500 index in Mar 2018, when it returned +61.65% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. VRTV had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -53.52%. It is interesting to note that both VRTV and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.

VRTV 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 VRTV's volatility from 18 Sep, 2018 to 6 Nov, 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 VRTV has significant positive skewness in it's return distribution. This indicates that investors can expect VRTV to recover from drawdowns quickly. Which makes VRTV 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 VRTV. Therefore, SP500 must receive a lower allocation than VRTV in your portfolio. SP500 index usually has shorter drawdown period than VRTV.

On a general note (since you are interested in VRTV), two mid cap instruments that deserve special mention are ABMD and TWTR. They have significantly outperformed the overall market.

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