Trade Alert/Portfolio Cleanup (Selling some, And Some Puts)
Over-diversification can actually become a hindrance to performance and part of good portfolio management is being disciplined enough to stay in the stocks that you have the highest conviction in and move on from those that you don’t.
Bryce here. Cody is on the road today and we are just writing to share some portfolio cleanup that we did today.
With that said, we are selling Solaredge (SEDG) and Palo Alto Networks (PANW) common stock, and our iShares China Large-Cap ETF (FXI) call options. We also sold some miscellaneous put positions that we had in the hedge fund. We are not crazy bearish right now or anything like that, this is simply cleanup. And selling these stocks is not an easy decision, but as mentioned, it’s a necessary part of being a good portfolio manager.
A quick word on each. We’ve had Solaredge since September 2016 when the stock was at $13. Even though this stock has given back a lot of gains in the last year or so, we trimmed a lot of this stock when it was much higher and we are still selling it at over 5x our cost basis. We are still believers in the Solar Revolution but we think Tesla (TSLA) is probably the best solar company on the planet and it is our top position, so we have plenty of exposure to this sector already. With respect to Palo Alto Networks, it is a great company and we only recently started buying it after it got demolished following a bad earnings report. We think Crowdstrike (CRWD) might be the more Revolutionary name in the cybersecurity space and we are sticking with CRWD as our core holding in this sector. Lastly, we think Tencent (TCEHY) is one of the best and only legitimate companies to own in China and we are not crazy bullish on the entire Chinese economy (the FXI has lots of exposure to construction companies, banks, industrials, etc. that are partially owned by the state), so we are sticking with TCEHY and selling FXI.
