Revisiting the Jettisoned
Every once in a while I like to look back at all the stocks I've sold, and see if there's something I missed or might learn from them even if they're no longer in my portfolio (and beat myself up a little if they've gone up since I sold them.
I sold Design Within Reach (DWRI -- click to register for free RT streaming quote) back in December at $5.95. I completely lost faith in the management, and thankfully recognized that I had bought my small position without adequately understanding their problems with production and shipping costs, competition, and self-cannibalization by their various selling vehicles (showrooms, internet, catalog). Today as I type this, the price is below my sale price at about $5.85, but in all honesty I could have held on and sold over $7 if I had waited until January. I would have had to be quick, though, they've just announced that they're delaying their 10-K and good news about DWRI in the near future seems unlikely. I'm still happy to be out of this one.
Cendant (CD) I wanted to shed as soon as they announced their breakup plan, and did sell a few days later at $17.63. Like DWRI, I lost money on this one but could have lost more had I waited longer -- it has dipped to $15 or so and is now at just about $17. Of course, SpaceDev, the company I added to with my Cendant sale money, has lost money too since then. I still have no interest in owning this broken-up conglomerate that's dominated by mid-tier brands (Ramada, Avis, etc.) -- the hope was that these brands could build synergy together, but clearly all management and the investment bankers were interested in was churning the money. Almost all mergers are sold as being about building synergies, and almost all breakups are about releasing value -- both arguments, in most cases, are hard to believe ... most mergers and breakups are about enriching investment bankers and the egos of CEOs. Even if Cendant does trickle up higher if folks buy in to the "unlocking value" argument before the split goes through, I'm not interested. Still happy that I sold this one.
I sold CNET Networks (CNET) and Anglo American UK (AAUK) at about the same time last summer. Both would have probably been better held since they've gone up significantly since I sold. I sold AAUK at $23.44 (now at a split-adjusted $36.50) because I didn't want to maintain such a large holding in a mining collussus that I didn't understand very well, and CNET at $11.98 (it's now at $13,78) on buyout rumors that I thought lifted the stock to overvalued status. I still think both are fine companies and if I had unlimited funds I'd regret that I shed these shares ... but I used that money to diversify internationally into Korea (with the EWY index) and India (with the IFN closed end fund), and both of those have appreciated more than the shares I sold, so on the whole I'm reasonably sanguine about these premature sales.
And one more to note (though there are others -- both good and bad -- that I'll get to in another post) -- I sold New York and Company (NWY) when it started to appear to me that their turnaround story wasn't turning around, or at least not quickly enough for me, and bought Chico's instead. NWY may yet turn around, but they've been on a rollercoaster since I sold them -- I sold at $15.80 and they subsequently dipped to $13 and rose to about $22 at the beginning of this year, before again dipping to the current price of ... just about $15.80 again. I still don't feel like I'm at all confident in NWY's ability to compete against Chico's and the other specialty retailers or the resurgent JC Penney's and their ilk ... this may be another opportunity to buy in with the expectation of the turnaround gaining traction, but I'm not interested in returning to New York at this point.
On the whole, I don't like to sell. I'd rather even ignore a company in my portfolio for a while if I'm frustrated with it, with the assumption that they're more likely to improve than I am to pick a good selling price. But sometimes I need money to put into better ideas, and sometimes I just lose faith in a company's management or in my initial investment thesis and decide to stop being a shareholder. In most of these cases, I still think my decision to sell was reasonable ... though it may have cost me some money, or I may have sold too late or too early. And I may just still be too impatient -- it's possible that my original investment theses for these companies will still play out in the years to come while I watch from the sidelines.
I sold Design Within Reach (DWRI -- click to register for free RT streaming quote) back in December at $5.95. I completely lost faith in the management, and thankfully recognized that I had bought my small position without adequately understanding their problems with production and shipping costs, competition, and self-cannibalization by their various selling vehicles (showrooms, internet, catalog). Today as I type this, the price is below my sale price at about $5.85, but in all honesty I could have held on and sold over $7 if I had waited until January. I would have had to be quick, though, they've just announced that they're delaying their 10-K and good news about DWRI in the near future seems unlikely. I'm still happy to be out of this one.
Cendant (CD) I wanted to shed as soon as they announced their breakup plan, and did sell a few days later at $17.63. Like DWRI, I lost money on this one but could have lost more had I waited longer -- it has dipped to $15 or so and is now at just about $17. Of course, SpaceDev, the company I added to with my Cendant sale money, has lost money too since then. I still have no interest in owning this broken-up conglomerate that's dominated by mid-tier brands (Ramada, Avis, etc.) -- the hope was that these brands could build synergy together, but clearly all management and the investment bankers were interested in was churning the money. Almost all mergers are sold as being about building synergies, and almost all breakups are about releasing value -- both arguments, in most cases, are hard to believe ... most mergers and breakups are about enriching investment bankers and the egos of CEOs. Even if Cendant does trickle up higher if folks buy in to the "unlocking value" argument before the split goes through, I'm not interested. Still happy that I sold this one.
I sold CNET Networks (CNET) and Anglo American UK (AAUK) at about the same time last summer. Both would have probably been better held since they've gone up significantly since I sold. I sold AAUK at $23.44 (now at a split-adjusted $36.50) because I didn't want to maintain such a large holding in a mining collussus that I didn't understand very well, and CNET at $11.98 (it's now at $13,78) on buyout rumors that I thought lifted the stock to overvalued status. I still think both are fine companies and if I had unlimited funds I'd regret that I shed these shares ... but I used that money to diversify internationally into Korea (with the EWY index) and India (with the IFN closed end fund), and both of those have appreciated more than the shares I sold, so on the whole I'm reasonably sanguine about these premature sales.
And one more to note (though there are others -- both good and bad -- that I'll get to in another post) -- I sold New York and Company (NWY) when it started to appear to me that their turnaround story wasn't turning around, or at least not quickly enough for me, and bought Chico's instead. NWY may yet turn around, but they've been on a rollercoaster since I sold them -- I sold at $15.80 and they subsequently dipped to $13 and rose to about $22 at the beginning of this year, before again dipping to the current price of ... just about $15.80 again. I still don't feel like I'm at all confident in NWY's ability to compete against Chico's and the other specialty retailers or the resurgent JC Penney's and their ilk ... this may be another opportunity to buy in with the expectation of the turnaround gaining traction, but I'm not interested in returning to New York at this point.
On the whole, I don't like to sell. I'd rather even ignore a company in my portfolio for a while if I'm frustrated with it, with the assumption that they're more likely to improve than I am to pick a good selling price. But sometimes I need money to put into better ideas, and sometimes I just lose faith in a company's management or in my initial investment thesis and decide to stop being a shareholder. In most of these cases, I still think my decision to sell was reasonable ... though it may have cost me some money, or I may have sold too late or too early. And I may just still be too impatient -- it's possible that my original investment theses for these companies will still play out in the years to come while I watch from the sidelines.
This article posted by One Guy @ 3/16/2006 12:29:00 PM 0 comments
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