Let me clarify. I have no difficulty with bailing at ANY time. I have difficulty understanding why someone would hold on just to get a price target - when the price target was determined by a 'bad' purchase decision in the past. My thought would be that if SGI is at 20 and it looks like they can earn >15%/year on equity, I would hold, whatever my buy point had been. If it is selling at 10 and shows no sign of generating free cash flow, that is the time to sell.
For me, I went to the Annual Meeting with the stock at 10, and became convinced that RB had a very clear goals and methods. His board was totally behind him. He knew where the assets were, had a sense of direction, knew what MIPS was worth, knew what the strengths of his balance sheet were, etc. I sold a little bit at 21, and bought it back under 12. I want to see the next card played. I don't believe that the downside risk is great, and I can see a great deal of potential upside. The pricing on the stock is still rational. If they start to grow again, this market will give it multiple expansion that could be breathtaking. My internal guess had been a near break-even last quarter and profit this. Clearly I'm a quarter off.
I'm trying not to lose money. And if I do that enough, I'll likely make some. |
