45.92 -0.84 (-1.84%) Sell

Prayers for WES investors as it delivered massive losses

13 min read

WESTERN GAS PARTNERS LP ranked among the worst performers on Monday. It delivered -1.84% to close at 45.92. On a day when the overall market breadth was 34%, it closed higher than 73% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing WES]

Buy-and-Hold investors in WES experienced a maximum drawdown of -16.72% over the last three months. It delivered +0.9% during this flat trending period. There were no long signals during this period. However, the short signal was not profitable and lost investors -0.9%.


WES has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 14 Feb, 2017 to 26 Sep, 2018. Over the last 2 years 11 months and 10 days, WES underperformed the SP500 index on 50% days. Which indicates that on days WES underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months WES delivered losses on 62% days. However, it still managed to end this period in a profit. It's best return during this period (of +13.88%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -4.5%) was on Tuesday, 20 Nov, 2018. The longest stort-term trend during this period was 8 losing days, which started on 23 Oct, 2018 and ended on 1 Nov, 2018. This bearish trend lost -16.49% of investor capital.

The last 12 months saw WES's investors making profits in 6 months and incurring losses in 6 months. WES was less consistent in delivering monthly returs than SP500 index. WES significantly outperformed SP500 index in Apr 2018, when it returned +13.67% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. WES had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -27.21%. It is interesting to note that both WES and SP500 index significantly outperform during months when quarterly/annual results are announced.

"My father, being a Scotsman, taught me to look after finances. I'm shrewd. Some people may call me tight.

WES 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 WES's volatility from 22 Oct, 2018 to 8 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 WES has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

On a general note (since you are interested in WES), three small cap instruments that deserve special mention are BURL, AAXN and ZBRA. They have all outperformed the market and must be closely watched for investment opportunities.

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