Sell DDOG, ELF and ASO
As expected, the Federal Reserve elected to hold the Federal Funds Rate (FFR) steady today (at 5.25% to 5.5%) and also increased their projection for the FFR for 2024 from 4.6% (in June) to 5.1%. This is consistent with the “higher for longer” mantra.
There is a lot we could interpret from all this (and we will). The market is holding up relatively well because there isn’t a lot of surprise here, and Jerome Powell is leaving the door open to be “data dependent” in his press conference regarding the FOMC’s future moves.
Still, my takeaway is that, with three new positions added today, we’re leaning a little too bullish for this market.
To get back into balance we’re going to sell three positions.
First up is Datadog (DDOG), which is trading right around our entry point from June. Datadog had a decent earnings report but the stock took a hit in early August. It has rebounded enough to get us back to breakeven. Let’s step aside, for now. SELL
e.l.f. Beauty (ELF) is also being sold today. We’re holding on to half our position (we sold the first half for a 32% gain about a month ago) and have a double-digit gain despite the stock going into free fall this week. Now to be clear, ELF has been a great stock and this selloff is very unusual. We are being a little reactionary here. But in this environment, with a gain dwindling on just a half position, I’d rather react and take a profit than risk holding tight and having to sell at breakeven, or worse. SELL REMAINING HALF
Lastly, we’ll sell Academy Sports & Outdoors (ASO) for a roughly 15% loss. Shares lost ground after we added in August then bounced back after the quarterly report on August 31. They’ve been trending lower since. Like ELF, I suspect that if we just sat and held long enough this position would eventually work out. But we’ve just added positions that I like more at this particular moment, and therefore we need to make cuts elsewhere to keep our portfolio to a manageable size. SELL
