Either you get a bargain or a permanent impairment. I have a rule to check in after a 10 and 20% loss to see if the thesis is still intact. If have doubts, sell, if I don’t, I will add. Even Mike Burry early on in this thread noted that stocks making new lows often fall much more. Maybe for technical reasons, but I also think it is because the majority of market participants maybe over looked something. FWIW, I did sell PSX because upon review, I didn’t not like the action in the energy markets. In other case, I continue to hold.
If having these rules makes you feel more comfortable when things take a turn for the bad in terms of price action, go for it! However, for some reason I am able to look heavy paper losses straight into the eyes, yeah sure, I will be wrong a lot if times (remember I have been doing this investment stuff only kind of semi-serious for about one year), but I take comfort in the fact that I am constantly trying to pay as little as possible. This way, I hope to minimize permanent impairment of capital, i.e. putting the odds on my side.
Looks at WHA.AS for example? Has it performed (in terms of business) like you expected when you bought it? You posted about it late last year, stock is down 50% from there, what is you plan? Did you add to your position?
I hoped things would stay roughly the same they had been, however the new CEO had other plans, which have messed up the company's valuation. I am currently gathering some liquidity in order to severely average down my purchase price.
Why did it go down, irrational market? Just before the new CEO announced the company's new strategy, share prices had been trading within a small range for months. The new strategy was vaguely formulated as per the rating agencies, plus a lot of individual shareholders were worried their interests were not taken into account. A superposition of these problems brought the share back down to circa €15. The CoronOil crash did cause it to go to €10.
There is a whole shareholder initative going on right now of which I am a part. We gathered around 100 shareholders, representing more than 1.5% of the outstanding share, in an effort to force the management to think about creating shareholder value for once. Two shareholder letters have been published in several major Dutch financial news sites. It has resulted in a meeting between representatives of the group and the management. Crux of the initiative: give proceeds from partial asset liquidation back to shareholders through a megadividend or share backbacks instead of investing it into something that will be generating lackluster ROI. To give a feeling for the amount of liquidation, there will be enough cash to buy back the company twice!
One more thing: what I learned from this is not to invest in the Netherlands. Shareholders are treated like garbage, there are no activist investors who would want to pick up free money from the ground, and managements are hardly rewarded with stock price dependent compensation. Managements here just lack that special sense for generating value for shareholders, while there is no one who will punish them for not doing so...
You are also in GME and TLRD, which look like they have serious issues? What is the plan here?
TLRD is a long term play, it will survive, pay down debt, and repurchase shares in the mean time. In 5 years it will be in a very reasonable shape. If the GME play works out reasonably on time I will deploy some of the gains into this security.
About GME: we will see what happens after the next generation of gaming consoles is released at the end of this year, this release is the major catalyst. Combining the uptick from consoles with heavy share buybacks should create the perferct storm unleashing the stock's real value. Besides all of this, management is being pushed towards creation of shareholder value as it is being menaced by a group of activist investors who are in the process of putting a shareholder representative onto the Board of Directors (see: siliconinvestor.com.
-- Nya -- |
