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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (48116)6/4/2012 7:28:40 PM
From: E_K_S1 Recommendation  Read Replies (3) of 78451
 
Re: Value Stocks sold w/ the intention to Buy back at even a "better" value.

This is for any of the many value investors that are looking to play defense but are still attracted to the value proposition. I have been faster to cash in a value play, book my small profit and re-visit the stock some time in the future at a lower price.

I have set up a watch list of stocks that I have sold which I consider to still provide a value proposition but because of general market conditions and/or overall technical selling are out of favor. I plan to buy several of these back at some lower price. I have initially set a 10% lower price target as a possible re-entry point.

If there are no other specific company reasons NOT to re-buy the stock, what has worked for others when buying back an already good value buy (based on several of the metrics we consider that make up a value buy)?

For example, Paul recently re-entered NYB (which is one I have owned for year but no longer hold a position) because it was a low enough entry point and yields over 8%. I think the current price is attractive but the xdividend date isn't until August 3, so I will pass and look at entering the stock sometime in late July at or lower than the current price.

Another one that I recently sold is BG. I sold my last batch at $60.35/share to book my small gain and have a re-entry point 10% below my last sales price or around $55.00/share. The stock is at $57.83, 5% lower than my last sales price and I still consider it to be a good value candidate selling at a forward PE of 8. I still think the stock can go lower.

There are many other value stocks that have been discussed here both bought and sold but still remain good value candidates. So, for this current market correction cycle, I am generally selling any of the recent winners, and looking to buy back at (1) some lower price and/or (2) a lower low based on 600 day MA rather than a 200 day MA and/or (3) some other metric that I have yet to determine - perhaps some measure of the "fear" index.

So, I throw out the question for the group. Many times we mention that we will re-enter the stock at some lower price and time (ie. close to dividend period). What rule or rules have you used other than spreading out your buys over time to build up your value stock inventory w/o giving back too much to Mr. Market?

EKS

P.S. Or is this just another explanation for trying to time the market. I do know that with all of my recent sells, I am bringing my portfolio turnover rate down from several years to several months . . .
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