The home products giant Reckitt Benckiser has not been a great performer over the past year but a quick glance at an ActivateAlpha graphic revealed a more worrying pattern. Regular readers will know that ActivateAlpha’s bubble charts try to capture generic style/quant screens for stocks and sectors. In a nutshell, the market is like a beauty parade and when a stock starts to lose its appeal across a variety of fund styles(Value, Quality, Growth, Earnings Momentum) or strategies it does not augur well for demand/bids for the stock.
In the chart below, moves along the x-axis track the composite rank/attractions of the stock. The y-axis tracks relative performance. The following pattern is not great showing rolling 3 month relative price performance slipping in tandem with ranking deterioration; snail trail tracking back from right(good) to left(bad) over last 3 months:
One senses that investment committees across many fund types in their next review might take a closer look at the near-underperformance and struggle to see why people would want to own it…
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