Sell Purple Innovation (PRPL), Castle Biosciences (CSTL), Poshmark (POSH)
It’s been a week or so of comparatively calm market action, which has given us a chance to evaluate how our current roster of stocks is behaving. With that evidence, and a new batch of stocks coming tomorrow in the March Issue, we’re going to step aside from a few of our weaker performing positions today. Doing this will keep our portfolio to a more manageable number and free up some capital to either direct into new opportunities or hold in cash to be deployed at a later date.
Purple Innovation (PRPL) missed expectations when it reported two weeks ago and the stock was hammered. We held on and shares have bounced nicely, but there are still lingering concerns about how the company will perform as consumers migrate back into stores and (possibly) do less shopping online. To be clear, Purple sells both online and through brick-and-mortar partners. Still, there is a transition to be managed there. We’ll take a little risk off the table by selling now. SELL
Castle Biosciences (CSTL) fell with other growth stocks and never got a bounce after reporting on March 8. Shares are revisiting their recent lows today, suggesting our best move is to step aside now and avoid the risk of a larger decline. SELL
Poshmark (POSH) is an interesting story that we’ll likely come back to. However, the combination of severe weather and lingering pandemic impacts added up to an earnings miss and a general sense of “blah” regarding initial 2021 guidance. We started with a half-sized position, which I’m especially thankful for now, so taking a loss shouldn’t be too painful. I do think that for those that want to wait it out or have a really small position that just sitting pat with POSH will work out fine. However, in my case as manager of our portfolio, which has more than a dozen stocks and more on the way, I need to make room for fresh names. SELL