Re: Selling
Good overview. I still hold a few of those you sold. One of my best bets was adding to my COP. My initial buy was 10/31/07 at $85.00! I added a few shares with one buy in 2008 and seven more buys in 2009. It's now my No 1 position in the portfolio. I initially bought because Buffet owned it and the Mc Dep report had it as one of their most undervalued integrated oil plays. Then Buffet began selling his position and then the 2009 crash. I peeled off some shares from XOM and CVX during that period (lucky it was close to their highs) and moved the money into COP. COP raised their dividend and this year sold some assets (some oil sands property) that went to pay down debt. COP is now ranked as the No. 3 integrated oil company and my once loosing position has been averaged down to a good core position (w/ low cost basis) that yields a pretty good stable dividend with a growth kicker. It's still 40% undervalued according to the most recent MC Dep report (New McDep report as of 3/30/2010 Lower ConocoPhillips NPV to $95 from $105: mcdep.com ).
Otherwise, my main criteria for keeping or selling (other than a lot of the items you mentioned) is current PE and forward PE. I want BOTH to be below the S&P consensus PE ( The normal PE ratio for the S&P 500 over the past 80 years is close to 15 - seekingalpha.com ). I want to see the forward PE dropping as revenues increase. PE's below 12-13 I will keep, my holds should pay me some type of dividend (w/ few exceptions like FLR), LT debt s/b no more than 3x revenues (my new Buffet rule) or it becomes a possible sell and I want to see innovation and/or small divisions with extra ordinary grow. This shows me that management encourages new business development (the company is always evolving trying different things). Many times these small divisions get pretty big, are spun off to the shareholders or sold and add significant value to the company.
Finally, I want to see long term debt fall over time and look for the company to use extra cash to buy up treasury stock from time to time.
For example E.I. du Pont de Nemours and Com (NYSE: DD) a new position I started in 2008 ( a top 10 holding) is up 45% from my buys in 2008 but I think I will still hold on. Forward PE falling now at 12.6, Qtrly revenue growth (YOY) up 22%, LT debt 2.6x revenues, 9 dividend increases over last 16 years and still yields 4.3% (w/ falling payout ratio of 62%).
Yesterday they announced a minority stake in a Chinese chemical company (DuPont to buy minority stake in Chinese chem maker - DuPont to buy minority stake in Chinese chemical maker for an undisclosed sum finance.yahoo.com ).
So, I can only conclude that DuPont's China strategy is still playing out. In fact, they continue to invest in other local industry businesses which should contribute to their future revenues.
My main reason for buying in 2008 was the expansion of a new manufacturing facility in China for their new Solar Cell technology.
DuPont Apollo Ltd. Opens Thin-Film Photovoltaic Production Facility
www2.dupont.com
From the article:"...China, Nov. 17, 2009 - DuPont Apollo Ltd., a wholly-owned subsidiary of DuPont, announced the opening of its silicon based thin-film photovoltaic module manufacturing facility...."
"...The 538,000 sq. ft. manufacturing facility will have an annual capacity of up to 50 megawatts with a thin-film-on-glass photovoltaic module production line. Full-scale commercial production is targeted for the first quarter 2010. In addition to providing innovative thin-film photovoltaic modules that are fully International Electrotechnical Commission (IEC) certified, DuPont Apollo offers a total system solution focused on the China domestic market to help safeguard customers’ long-term investments in renewable power generation...."
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Selling strategies continue to be difficult for me. Do you peel off shares and scale out of a position or just move on with an out right sale? I never want to let the big bagger get away by selling way too early. However, there are several times I have suffered the consequences for holding on too long when the appropriate thing to have done was to close out the position and just hit the sell button.
EKS |
