Wednesday, November 13, 2013

Boeing (BA) - Did You Know BA Returned 100% in Two-years and Risk Adjusted Smashed the S&P 500? Check This Out...

This article was posted: Wednesday, November 13, 2013

BA closed Wednesday trading at $133.17, up 0.6%, with IV30™ down 2.7%. The Symbol Summary is included below.

Provided by Livevol

The Boeing Company (Boeing) is an aerospace company. The Company operates in five segments: Commercial Airplanes, Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), Global Services & Support (GS&S) and Boeing Capital Corporation (BCC).

This is actually a very short note simply to alert everyone, including myself, that this big boring airplane / defense firm has returned over 100% over the last two years and has more big news coming out.  I'll compare the risk return profile to the S&P 500, and eyes will pop, I'm guessing... mine did...

 Here's a snippet from an article today:

DUBAI/PARIS (Reuters) - Boeing (BA) looks set to dominate next week's Dubai Airshow with more than $100 billion of deals as it aims to launch its latest long-haul jet with up to 250 potential orders from as many as five airlines, industry sources said.

The U.S. planemaker is pressing ahead with the launch of its 777X mini-jumbo despite uncertainty over where it will be made, with workers at the existing 777 plant outside Seattle holding a ballot over a new employment contract on Wednesday.

Bulging civil and military bank balances in the Gulf remain a magnet for Western aerospace executives as they seek to tap thriving demand for jetliners and combat aircraft that offer some respite from defence cuts at home.defense

A widely expected potential order for as many as 150 of the new 777X passenger jets from Dubai flag carrier Emirates (EMIRA.UL) could come close to matching the $62 billion of deals amassed at the last Dubai show two years ago.

"Dubai's success is related to its airlines. It's a global hub now and Dubai did this by buying planes and constantly renewing its fleet," said John Sfakianakis, chief investment strategist at Riyadh-based asset management firm Masic.

"Abu Dhabi, Qatar and Saudi Arabia are also investing billions in aviation to be able to connect to the world. These states have to continue to invest if they want to expand."

Source: Reuters via Yahoo! Finance $100 billion Boeing order bonanza to dominate Dubai show, written by Praveen Menon and Tim Hepher.


Let's quickly tun to the Charts Tab (two-years) below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

Provided by Livevol

Look at that stock chart.  We can see that over this two-year period BA is actually up 100% (or ~$50 billion in market cap).  And what else do you get with BA?... how about historical realized volatilities of:

HV10™: 15.05%
HV20™: 23.08%
HV30™: 24.62%
HV60™: 21.66%
HV180™: 21.01%

A 100% return with a standard deviation of returns of 21.01% leaves an information ratio (IR) of ~ 4.8 (just divide the two numbers).  The S&P 500 over this time period:

Return: 42%
HV180™: 11.39%

That's an IR of 3.72 (BA was 4.8).

Here's a stock chart comparing the two (BA in yellow, SPX in red):

Provided by Livevol

Is BA still a big boring airplane / defense firm or a ridiculously good investment over the last two-years?  The future, no idea. The past, we have an idea...

This is trade analysis, not a recommendation.

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