Thread by @BrianFeroldi

1/ When to sell (thread)

I rarely sell, but that doesn't mean I never do it

Here are the 11 reasons why I sell a stock

⬇️⬇️⬇️⬇️⬇️⬇️

2/ Thesis Busted

This can be boiled down to "I was wrong"

The original reason why I bought the stock is no longer valid, due to

Competition
Legal Ruling
Management
Moat Narrowing
Outside force
....etc

Thesis busted = admit defeat and move on

3/ Accounting Irregularities

If I can't trust the numbers, how can I make decisions?

Companies like $LK are dead to me for life

4/ Mega Acquisition I don't like

Most big acquisitions destroy value and distract management

Ex: I'm still not convinced $TDOC / $LVGO will work out

Only time will tell

5/ Thesis Complete With No Second Act

If the company captures its opportunity and runs out of room to grow, I'll sell and roll proceeds into higher growth opportunities

Tricky to tell, but organic revenue growth below <5% is a decent proxy

6/ Cultural Deterioration

Management exodus
Leadership transition
Glassdoor rating plunge
....etc

7/ Extreme valuation + Enormous Market Cap Compared to opportunity

High Valuation is OK if I think a 10x return is possible

High Valuation NOT OK if I think there's only room for a 50% gain in a best-case scenario

8/ Too Large A Position For me

15% of my portfolio is my max for SUPER high-quality business (ex $AMZN)

10% is my portfolio is my max for a low-quality business (ex $NNOX)

9/ Company Acquired

I hate it when companies I own get bought out, but it happens

If odds are closing are very high, I sell and move on

10/ I Need/Want Money For Personal Life

Isn't this the reason we invest in the first place?

11/ Tax-Loss Harvesting

Will sell losers to lower tax bill

12/ All of these guidelines covered in the "When To Sell" tab of my public spreadsheet

docs.google.com/spreadsheets/d…