Conflicted -- losing money while being right (MIDD, VRTX)
It turns out that my concern was a couple weeks early on the short term valuation of Middleby and Vertex, but I was right (insert sound of patting self on back) to think that a significant amount of optimism was priced into the shares considering their near-term growth prospects.
So I'm a little conflicted -- I don't like to see any stocks that I own going down and I still own smaller portions of these ... but I am somewhat relieved that my thesis played out in the short term, since at least my rationale turned out to be reasonable.
For those who weren't listening, I lightened up a bit on my shares of Middleby (MIDD -- click to register for free RT streaming quote) and Vertex (VRTX) to protect some huge gains a few weeks ago because I thought the market was expecting absolute perfection from both companies -- Middleby because they are very richly valued relative to their current organic growth, and Vertex because they were valued as if both of their top tier compounds were on their way to blockbuster status without a hitch.
Vertex released a report that their phase II studies of VX-702 worked as expected and had a reasonable safety profile, but it sold off because people were hoping for another immediately obvious blockbuster like VX-950, the Hepatitis C drug that's also in Phase II and setting the world on fire. Not yet.
Middleby was exactly in line with expectations, which certainly appears to not be good enough in today's market ... not when the a stock has been bid up to more than double over the past year.
As I type this, MIDD is down about 8% and VRTX about 6%. Not that big a deal for a long term investor, but worth avoiding if you can.
I still like both of these companies and sold less than half of my position in each, which is the disappointing part. I sold some shares to protect a profit and pull my original investment off the table, but I certainly intend to hold on to the remainder for a very long time in both of these cases. I would have been delighted to see them continue to grow without respite, but of course that never happens.
Emotionally, I was frustrated that both of them climbed immediately after I sold them (Vertex climbed more than 10% in the day after I sold it, just to rub it in), but somehow it's reassuring that they're now back below my selling point because I got a short term call right (for once). Not something that happens often ... and as any market psychologist will tell you, sometimes idiots like me are more excited about being "right" than about making money.
So I'm a little conflicted -- I don't like to see any stocks that I own going down and I still own smaller portions of these ... but I am somewhat relieved that my thesis played out in the short term, since at least my rationale turned out to be reasonable.
For those who weren't listening, I lightened up a bit on my shares of Middleby (MIDD -- click to register for free RT streaming quote) and Vertex (VRTX) to protect some huge gains a few weeks ago because I thought the market was expecting absolute perfection from both companies -- Middleby because they are very richly valued relative to their current organic growth, and Vertex because they were valued as if both of their top tier compounds were on their way to blockbuster status without a hitch.
Vertex released a report that their phase II studies of VX-702 worked as expected and had a reasonable safety profile, but it sold off because people were hoping for another immediately obvious blockbuster like VX-950, the Hepatitis C drug that's also in Phase II and setting the world on fire. Not yet.
Middleby was exactly in line with expectations, which certainly appears to not be good enough in today's market ... not when the a stock has been bid up to more than double over the past year.
As I type this, MIDD is down about 8% and VRTX about 6%. Not that big a deal for a long term investor, but worth avoiding if you can.
I still like both of these companies and sold less than half of my position in each, which is the disappointing part. I sold some shares to protect a profit and pull my original investment off the table, but I certainly intend to hold on to the remainder for a very long time in both of these cases. I would have been delighted to see them continue to grow without respite, but of course that never happens.
Emotionally, I was frustrated that both of them climbed immediately after I sold them (Vertex climbed more than 10% in the day after I sold it, just to rub it in), but somehow it's reassuring that they're now back below my selling point because I got a short term call right (for once). Not something that happens often ... and as any market psychologist will tell you, sometimes idiots like me are more excited about being "right" than about making money.
This article posted by One Guy @ 3/09/2006 02:06:00 PM 0 comments
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