Sold Softer Side of Sears (SHLD)
Sold my shares of Sears Holdings (SHLD) today at $136.93, for a small loss [correction -- just looked back at my records. This is actually basically a break-even transaction. I had bought on May 13, 2005 for $136.24. Still technically a small loss with commissions and margin interest payments]. This is a little unusual for me, as I'd held the shares for only a couple months, much shorter than my planned holding period of several years for most stocks. And there are a couple unusual reasons.
First, my personal portfolio reasons. I already have significant exposure to this stock through my holdings in Third Avenue Real Estate Value Fund -- this and three other Third Avenue funds are massive holders of Sears Holdings thanks to their big bet on KMart a while back. While they have been paring back holdings a little bit (which also is of some concern, but not a big deal because their holdings had become outsized portions of the portfolio with multiple hundreds of percentage gains), they still hold major portions of the stock. I think I might be better off letting Marty Whitman and his cohort manage this investment, because ...
Second, I don't have a great handle on profitability or plans for Sears moving forward. I bought this in a fit of star-gazing as I watched Eddie Lampert bring them back from the brink and make some masterful moves, including the Sears merger/takeover, but I think I bought too late to capture the magic of the turnaround artist ... and going forward, without the cost cutting and real estate story propping up the earnings and share price, I'm not sure Sears is going to grow fast enough to make it worth it for me to try to track them. A fine company, and I'm sure they'll continue to do well with good management, and I do generally love to buy stocks that don't issue guidance or supply information to analysts to make their jobs easy, but I also prefer to search out stocks that I can understand a little better and that I think have the potential for more dramatic growth. Plus, it's more fun that way, and as I've said before, if it's not fun, why not just buy an index fund instead?
And third, I want the money for some other investments that look more promising, and that are smaller companies (which is my general preference, all other things being equal). I may get a good price on Chico's tomorrow and if so I'll likely buy. I'm also looking at some other possibilities, including re-upping in some of my other holdings -- possibly Myriad Genetics (MYGN) or Protein Design Labs (PDLI) or Akamai (AKAM), all of which look very attractive to me at today's prices. I've also been looking into the companies that contract out to provide services and clinical trial management to the pharma and biotech sectors because I consider that sector to have significant growth potential with the expanding numbers of biotech drugs hitting the clinic, including Covance (CVD) and Parexel (PRXL), so if I get myself comfortable with those or other companies they'll be candidates as well. PRXL looks like it has the advantage of being much smaller and nimbler and a partial turnaround story, while CVD looks like the market leader with good sustained growth potential.
In all likelihood I'll be making a buy of some sort on Friday and will let you know what it is then.
First, my personal portfolio reasons. I already have significant exposure to this stock through my holdings in Third Avenue Real Estate Value Fund -- this and three other Third Avenue funds are massive holders of Sears Holdings thanks to their big bet on KMart a while back. While they have been paring back holdings a little bit (which also is of some concern, but not a big deal because their holdings had become outsized portions of the portfolio with multiple hundreds of percentage gains), they still hold major portions of the stock. I think I might be better off letting Marty Whitman and his cohort manage this investment, because ...
Second, I don't have a great handle on profitability or plans for Sears moving forward. I bought this in a fit of star-gazing as I watched Eddie Lampert bring them back from the brink and make some masterful moves, including the Sears merger/takeover, but I think I bought too late to capture the magic of the turnaround artist ... and going forward, without the cost cutting and real estate story propping up the earnings and share price, I'm not sure Sears is going to grow fast enough to make it worth it for me to try to track them. A fine company, and I'm sure they'll continue to do well with good management, and I do generally love to buy stocks that don't issue guidance or supply information to analysts to make their jobs easy, but I also prefer to search out stocks that I can understand a little better and that I think have the potential for more dramatic growth. Plus, it's more fun that way, and as I've said before, if it's not fun, why not just buy an index fund instead?
And third, I want the money for some other investments that look more promising, and that are smaller companies (which is my general preference, all other things being equal). I may get a good price on Chico's tomorrow and if so I'll likely buy. I'm also looking at some other possibilities, including re-upping in some of my other holdings -- possibly Myriad Genetics (MYGN) or Protein Design Labs (PDLI) or Akamai (AKAM), all of which look very attractive to me at today's prices. I've also been looking into the companies that contract out to provide services and clinical trial management to the pharma and biotech sectors because I consider that sector to have significant growth potential with the expanding numbers of biotech drugs hitting the clinic, including Covance (CVD) and Parexel (PRXL), so if I get myself comfortable with those or other companies they'll be candidates as well. PRXL looks like it has the advantage of being much smaller and nimbler and a partial turnaround story, while CVD looks like the market leader with good sustained growth potential.
In all likelihood I'll be making a buy of some sort on Friday and will let you know what it is then.
This article posted by One Guy @ 8/25/2005 11:41:00 PM 2 comments
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