Should you exit Medley Management after the current volatility slide?

It appears Medley Management will continue to recover much faster as its share price surged up 1.43% today. The company current daily volatility is 7.22 percent, with a beta of -0.12 and an alpha of 0.21 over DOW. As many of us are excited about trading, it is fair to break down Medley Management. Why are we still confident in our projection for a recovery.
Published over a year ago
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Reviewed by Raphi Shpitalnik

Medley Management currently holds roughly 6.05 M in cash with (946 K) of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 9.03, which can makes it an attractive takeover target, given it will continue generating positive cash flow.

How important is Medley Management's Liquidity

Medley Management financial leverage refers to using borrowed capital as a funding source to finance Medley Management ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Medley Management financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Medley Management's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Medley Management's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Medley Management's total debt and its cash.

Medley Management Correlation with Peers

Investors in Medley can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Medley Management. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Medley Management and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Medley is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Medley for more details

An Additional Perspective On Medley Management

We consider Medley Management relatively risky. Medley Management has Sharpe Ratio of 0.0097, which conveys that the firm had 0.0097% of return per unit of risk over the last month. Our standpoint towards estimating the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-eight technical indicators for Medley Management, which you can use to evaluate future volatility of the firm. Please verify Medley Management Downside Deviation of 5.78, mean deviation of 5.19, and Risk Adjusted Performance of 0.0327 to check out if the risk estimate we provide is consistent with the expected return of 0.0702%.
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Medley showing appearance of lower volatility

Downside deviation is down to 5.78. It may suggest a possible volatility slide. Medley Management is displaying above-average volatility over the selected time horizon. Investors should scrutinize Medley Management independently to ensure intended market timing strategies are aligned with expectations about Medley Management volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Medley Management's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Medley Management's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Our Final Take On Medley Management

While few other entities within the asset management industry are still a little expensive, even after the recent corrections, Medley Management may offer a potential longer-term growth to investors. To summarize, as of the 1st of April 2021, our up-to-date 30 days buy-sell recommendation on the company is Strong Sell. However, we believe Medley Management is undervalued with close to average probability of bankruptcy for the next two years.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Medley Management. Please refer to our Terms of Use for any information regarding our disclosure principles.

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