December 6, 2019
The Week’s Biggest Winner & Loser
Nike (NKE) blew out the week following a new analyst price target of more than $100, grabbing a +3.75% gain and earning itself the spot of the week’s Biggest Winner!
The markets once again showed their dislike for growth stocks without profits as Twilio (TWLO) got slapped this week for a -4.59% loss and earned itself the week’s Biggest Loser.
Target Position Size
Current Position Performance
1st Buy 2/14/2012 @ $79.58
Current Per-Share: (-$1,053.52)*
1st Buy 4/18/2013 @ $56.38
Current Per-Share: (-$112.12)*
1st Buy 8/5/2016 @ $11.10
Current Per-Share: (-$43.58)*
1st Buy 2/14/2012 @ $26.71
Current Per-Share: (-$55.03)*
1st Buy 2/14/2012 @ $41.70
Current Per-Share: (-$15.25)*
1st Buy 9/6/2016 @ $63.10
Current Per-Share: (-0.96)*
IDEXX Lab (IDXX)
1st Buy 7/26/2017 @ $167.29
Current Per-Share: $99.50
JP Morgan (JPM)
1st Buy 10/26/2017 @ $102.30
Current Per-Share: $94.55
1st Buy 11/11/2016 @ $24.20
Current Per-Share: $32.03
1st Buy 10/26/2017 @ $74.06
Current Per-Share: $57.09
Take Two (TTWO)
1st Buy 7/30/2018 @ $120.99
Current Per-Share: $0.00*
1st Buy 11/6/2018 @ $120.87
Current Per-Share: $0.00*
1st Buy 5/13/2019 @ $53.18
Current Per-Share: $47.41
1st Buy 6/11/2018 @ $134.05
Current Per-Share: $0.00*
1st Buy 2/6/2018 @ $1,378.96
Current Per-Share: $1,615.85
1st Buy 8/2/2019 @ $201.96
Current Per-Share: $0.00*
1st Buy 1/28/2019 @ $40.50
Current Per-Share: $0.00
1st Buy 5/24/2018 @ $29.53
Current Per-Share: $18.76
1st Buy 8/23/2019 @ $47.60
Current Per-Share: $46.72
1st Buy 8/8/2019 @ $125.71
Current Per-Share: $107.61
1st Buy 5/13/2019 @ $111.57
Current Per-Share: $100.41
GW Pharm (GWPH)
1st Buy 7/25/2018 @ $142.28
Current Per-Share: $118.90
* Indicates a position where the capital investment was sold.
Profit % for * positions = Total Profit / Original Capital Investment
In reviewing my Investments in Play portfolio, I decided that I have far too many positions and it’s time to trim the stocks I don’t have as much faith in as others.
In addition to making a more efficient and effective long-term portfolio, reallocation at the end of the year also offers me the opportunity to exit sectors I don’t particularly care for (like retail *cough*).
So, without further adieu, here are the five stocks on the chopping block:
In light of recent news of Berkshire’s (BRK.B) inability losing their bid to purchase Tech Data, I decided it’s time to close up my Berkshire position. While I do have great respect in Warren Buffet, this company has a surprising amount of risk.
With a cash horde of $130 billion that Buffet can’t put to work combined with his age approaching 90 years and no clear succession plan, it’s possible that Berkshire’s days as the ultimate long-term value play may be numbered.
I bought IBM (IBM) in the middle of the 2018 selloff. Its acquisition of Red Hat (RHAT) combined with its 5%+ dividend made IBM a very tempting long-term turnaround play.
While the stock’s performance saw a decent bounce from its 2018 lows over the course of the past year, the company’s actual performance has been terrible. CEO Ginni Rometty has destroyed more value in her time at the helm of IBM than any other CEO before her and the rest of her management team continues to flounder aimlessly.
After rising from a low just under $110 last year to slightly over $151 this year, Rometty’s failure to execute time after time caused the stock price to retreat back to the low $130s with no real timeframe on the turnaround or if such a turnaround is even possible at all.
While I believe IBM may have long-term potential, I’m not counting on it with its current management team of wandering jesters and nimrods. Time to get out.
I bought Pfizer (PFE) in January 2019 as it held up very well during the selloff of the fourth quarter of 2018. Along with its 3%+ dividend and a drug pipeline which although sparse was admirable. In addition, a robust Over-The-Counter (OTC) subsidiary contributed significantly to quarterly revenues.
It did, at least, until Pfizer (PFE) shocked Wall Street by selling its OTC subsidiary in the first half of 2019, decimating the stock price.
Since that point, Pfizer did recover with its stock price bouncing to around my break-even point. However, while Pfizer may develop another hit drug, the extreme volatility in a company of such a significant market cap reminds me of the reason I positively hate individual stock plays in the biopharmaceutical sector where headline risk can take out a single company but leave the competitors relatively unharmed.
I’ve decided to close up Pfizer and play healthcare using a sector-tracking ETF where an individual company’s bad news doesn’t decimate profits for the ETF.
Salesforce (CRM) was once the market darling of the Cloud stocks. In fact, Salesforce basically created the category.
While CRM has been an outstanding earner since its inception, the stock carries with it nosebleed valuations and has actually performed poorly over the course of the past year when compared to other possible targets.
I believe I may have been far too late for the Salesforce game and missed the majority of the move in this stock. Instead of hoping for further upside, I’m opting to close my position with a profit and focus on other companies that haven’t taken off to the sky-high valuation where Salesforce currently resides.
Take Two Interactive (TTWO)
I’m a huge fan of the video game space and believe in the long-term potential of both gaming and e-sports as a sector, however the individual game-makers are not the way to play this sector, in my opinion.
While Take Two Interactive (TTWO) is certainly the best-in-breed when compared to competitors Electronic Arts (EA) and Activision-Blizzard (ATVI), the fact that this cohort trades entirely based on the performance of their last hit games is unnerving.
I may look at adding a derivative play like Microsoft (MSFT) whose Cloud Data, OS, Office Software, and other divisions insulate against any poor performance its Xbox division may see.
In the meantime, I’m sticking with the horse that brought me – Logitech (LOGI). Logitech’s console-agnostic approach combined with a very healthy enterprise division and a decent dividend makes it the play I prefer for both video games and e-sports.
Time for Take Two to take five.
Time to Take Action…
Now that I’ve identified the five stocks I’m exiting, let’s see how it all went down.
This Week’s Moves
Berkshire-Hathaway (BRK.B): *Position Closure: +8.12%*
Berkshire-Hathaway (BRK.B) lost support with the rest of the market on Tuesday following Trump’s comments about delaying the Phase One Trade Deal until after the elections in 2020, triggering a stop-loss order I had in place which filled at $218.35.
While I have a long-held respect for Warren Buffet, Berkshire’s CEO, his ever-growing cash horde near $130 billion has proven to be very difficult for him to effectively put to work. That, in combination with his age of nearly 90 and no clear succession plan, led me to realize that I think I’d be better served buying a S&P 500 ETF rather than Berkshire-Hathway, sadly, as BRK.B hasn’t even kept up with the S&P 500’s gains in recent years.
This week’s sales locked in profits of +8.12% on my investment, first opened 4 months ago on August 2 at $201.96. Not too shabby.
BRK.B closed the week at $222.61, up +1.95% from where I closed on Tuesday.
IBM (IBM): *Position Closure: +28.05% Gain*
I started unwinding my IBM (IBM) position when manufacturing data on Monday caused the stock to lose support with the rest of the market. The selloff continued on Tuesday, triggering trailing stop orders I had in place which filled at an average price of $132.06.
The sale locked in +28.05% in profits on my investment, first opened last year on November 6, 2018, not a bad gain for 13 months.
IBM closed the week at $133.22, up +0.88% from my average selling price.
Pfizer (PFE): *Position Closure: Break-Even*
Even though Pfizer (PFE) held up well on Monday during market weakness, I closed the position at a negligible amount above my break-even point (my per-share cost was $38.54 and the order filled at $38.544) to get it out of my portfolio.
Pfizer’s sale of their over-the-counter subsidiary earlier this year positively destroyed any gain I was seeing in the stock, taking my position from a decent gain to a substantial loss. While I believe Pfizer may eventually execute an effective turnaround in the long run, I have too many turnaround stories in my portfolio and I see better potential in other positions.
In a case of truly coincidental timing, Pfizer paid out its quarterly dividend on Monday so I didn’t miss out on receiving it even though I sold my shares the same day.
PFE closed the week at $38.29, down -0.65% from where I closed on Monday.
Salesforce (CRM): *Position Closure: +9.58% Gain*
Salesforce (CRM) is one of the stocks on the chopping block before the end of the year, so my aggressive profit-taking started on Monday when CRM lost ground in advance of its Tuesday earnings report following a report on Monday with disappointing manufacturing data.
The ensuing selloff on Monday and Tuesday triggered stop-loss orders I had in place which filled at an average selling price of $159.40.
The sales locked in +9.58% in profits on my investment, first opened last year on June 11, 2018, further reinforcing my thesis that I really missed the majority of the growth in the name.
CRM closed the week at $158.01, down -0.87% from my average selling price.
Take Two Interactive (TTWO): *Closed: +30.15% Gain*
Take Two Interactive was on the chopping block and sold off on Monday with the rest of the market, triggering trailing stop-loss orders over the week which I had in place. My orders filled for an average selling price of $121.34.
The sales locked in +30.15% in profits on my investment, first opened on October 9, 2018, a very decent return in 14 months. That being said, as much as I believe TTWO to be the best investment target of the publicly-traded video game manufacturers, I’d prefer to play this space with Logitech (LOGI).
TTWO closed the week at $123.73, up +1.97% from my average sale price.
Want Further Clarification?
As always, if you have questions about any of my positions or have positions of your own that you’re curious about – feel free to leave a comment below!
See you next week!
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