Just a quick reminder that Cabot will be closed Thursday and Friday this week for Thanksgiving. I hope you have a great holiday.
On to the market, we’re in a good old-fashioned correction for growth stocks. The action in a lot of individual names is as ugly as we’ve seen in a while, with some stocks looking just downright awful. This is a broad move – very few stocks are being left out of it. I suspect the selling has been exacerbated by this being a holiday week.
As we’ve learned from past corrections like this, they’re painful and emotionally draining. And like a lot of things, they come on much more rapidly than in the past.
But they pass in due time, and they open up a lot of great buying opportunities. The trick is to make sure you have both the stomach and the capital to take advantage of those opportunities. Depending on how your portfolio and cash stash looked heading into it you may want to lighten up in a few areas now so you can flip that all-important switch from feeling like the prey to feeling like the hunter.
We sold a number of positions with nice profits in recent months. However, the timing of this pullback, coming right on the heels of the November Issue, is unfortunate.
Given that we don’t know exactly when this selling will abate, we’ll take evasive action in a few positions today to raise cash. As has been the case in the past, I’m not opposed to adding some of these positions back in the future when the smoke has cleared.
But right now, as I stated before, it’s about being in a position to take advantage of buying opportunities. And with a relatively stacked portfolio we could stand to lighten up a little.
New SELL Ratings
AppLovin (APP) had a great earnings reaction but things have fallen apart since. We’re only down -3% from our entry point so it’s a painless move to step out of the stock and reassess later. SELL
The RealReal (REAL) was one of our most recent positions and we entered it as a swing trade given the upside breakout after earnings. But I’m not willing to risk letting a trade turn into something bigger. Let’s cut the cord now. SELL
Bill.com (BILL) has been holding up as well as anything in the software space. That means there’s still meat on the bone here. Let’s be a little conservative and sell one-quarter of our initial position (meaning we’ll be down to a half-sized position) and hold on to the rest (which is still up roughly 275%). SELL A QUARTER
Upstart (UPST) has continued to slide so let’s sell another quarter. This will leave us with just a quarter of our original position, which I’d like to hold on to so we have exposure to this disruptive, albeit incredibly volatile, fintech company. We’ll book a gain of around 65% on this quarter position. SELL A QUARTER
New HOLD Ratings
SentinelOne (S) has fallen out of bed over the last two sessions and while this could represent a terrific buying opportunity we also have an earnings report coming up in two weeks. Shares may be in the penalty box until that event. For now, let’s just pause the buying and move to hold. HOLD