Sell WHD and APP
Today we’re going to part ways with two positions that we added in May and which we’ll make a little more than 10% on. Both positions were trading higher a couple weeks ago but have lost some momentum recently.
Cactus Holdings (WHD)
First up is Cactus Holdings (WHD), a pure-play provider of wellhead and pressure control systems for the U.S. onshore oil industry. As I mentioned in my report on the company, I’m not a huge fan of oil services companies due to the cyclical nature of these businesses, but I’m also not opposed to being in them while they’re working. Cactus has been working as the world opens up, but with oil prices retreating over the last two weeks and all the messiness around OPEC+, production deals, etc. there isn’t a lot of incentive to stick with the position right now. Depending on how things go with Saudi Arabia and the UAE we could see oil prices spike, crash, or any range of outcomes in between. Exposure to that type of market isn’t what I’m looking for as it’s a toss-up as to where oil services stocks, including WHD, will go. Let’s take our 10% gain and move on. SELL
AppLovin (APP)
AppLovin (APP) is a recent software IPO that offers exposure to the massive mobile app market. We jumped in when the stock was down and it then went on a huge rally, then fell sharply last week on a double downgrade from Morgan Stanley. The analyst cited valuation as a concern. As with so many volatile IPOs it’s tough to gauge where APP will go in the near term, but it’s fair to say the rally has lost momentum and the stock is going to need some time to recover. We made a quick 10% and can move on to other opportunities without worrying about the volatility here. And we can always come back to the name. Let’s book the gain. SELL