Back in July we wrote about how the market had done half way through the year. The question is five months later has much changed? Year to date 58% of stocks were lower through the end of June. Now 45.05% are lower through the end of November so there has been improvement. Our universe is all stocks that have traded for at least six months. There are 5,064 stocks in our universe now from 5,102 stocks at the end of June.
There is a bigger story however. There were 989 stocks that were up 20% or more at the end of June. Now there are 1831 up 20% for the year. Nice improvement on the one hand. However, there were 1,485 stocks down -20% or worse at the end of June. Now there 1,389 now down -20% at the end of November. So there still are a lot of dogs and very little improvement in those names down -20% or more.
We noted that If we remained at the June level of decent sized losers, then the mutual funds would start to harvest tax losses in August and September. They did not however. Instead we created an index of the biggest losers sorted by market cap and found those names were actually bought during the months of August, September and October.
We tracked performance from August 2nd through October 21st on 33 names and the average change was 3.51%. 17 names rose during this period and 16 moved lower. Only two names fell more than -10%. They were Stellantis (STLA) which dropped -19.96% and Humana (HUM) that fell -28.34%. We will be watching these names during December tax selling by hedge funds, investment advisors, financial advisors and individuals.
Now to the average price of the above statistics. First,1,616 stocks were under $5 in price at the end of June compared to 1,433 now. 2,198 stocks were under $10 in price at the end of June and now there are 2,021 stocks. 2,988 stocks were under $20 in price at the end of June and now there are 2,747. Yes, sport fans, that means close to 60% of all stocks were under $20 in June and now that number is 54%.
A key point on this is institutional investors often stay away from stocks under $5 so there is little to prop up the Noodles (NDLS) of the world that had fallen to $1.52 at the end of June since a peak of $51.97 the first month it began trading in 2013. Noodles is now at $0.75, dropping another 50% from it June low.
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Geoff Garbacz is a principal at Quantitative Partners, Inc. and works with several independent research firms that work with buyside clients, financial advisors and institutional investors.