Oh boy….. Balfour Beatty shareholders are bleeding today. Just the 20% share price collapse but could investors have spotted a problem? Regular readers of WealthiFi will be aware of our fondness for using an interesting graphic from ActivateAlpha which uniquely monitors multiple financial metrics tracked by a variety of different fund management styles combined with the relative price strength of a stock. In a nutshell, are the fundamentals deteriorating alongside the relative price strength?
While fund managers expend huge amounts of energy researching new buying opportunities it is behaviourally true to say that as existing holdings slide on a fundamental basis there is less effort given to exploring a “sell” decision. Check out this ActivateAlpha graphic tracking 20 data metrics viewed by a variety of fund styles and imagine an “elevator shaft” where a stock is struggling to appeal to ANY fund style. A profit miss as Balfour Beatty delivered today can induce an outsized reaction given the absence of any buyers from various fund styles; if there’s a negative surprise in a results statement welcome to the “elevator shaft”…..
Note the ‘snail trail’ and the composite factor score deteriorating(right to left) over a 3 month period(x axis) as relative price strength ventured into negative territory(downward on y-axis). Just not negative enough it would seem…
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