WHAT TO DO NOW: We’re continuing to pare back on losers and laggards, with the idea of redeploying the money into stronger names (including some possible earnings gaps this week). Today, we’re going to sell one-half of our position in DoubleVerify (DV)—we still like the story, but shares are getting whacked even after a solid earnings report last night. Our cash position will now be around 33%, which is higher than we’d prefer, but we’ll hold onto it for now.
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The market is off a bit this morning as interest rates are again perking up. As of 10 am ET the S&P 500 is off 0.3% and the Nasdaq is off 0.5%.
As we wrote in last week’s issue, big picture, nothing much has changed, with the odds strongly favoring higher prices ahead. But near term, the indexes are painting a bit of a misleading picture for growth stocks, with far fewer names hitting new highs than a couple of weeks ago; the recent backup in interest rates isn’t helping, either.
We’re still bullish, then, but are also managing our garden, pruning losers and laggards with an eye toward eventually redeploying them into stronger situations.
Today we’re going to sell half of DoubleVerify (DV), which was acting about as well as could be and reported a steady-as-she-goes quarter last night—but earnings season for growth stocks has been rough, and despite a rash of positive analyst comments, the report (and news of a modest acquisition) led to a big whack today. We’re going to sell half of our DV position and hold the rest for now. SELL ONE-HALF OF DV, HOLD THE REST
That will leave us with around 33% in cash, which is higher than we’d prefer given the evidence. That said, we’re also being more selective right now, with tons of earnings reports among names we own and are watching this week and next. We could even have further sells (or partial sells) depending on how things go.
Thus, right now, we’ll hold the cash, though some controlled pullbacks in current leaders (or upside earnings gaps in fresher names) could have us putting money to work in the days ahead.
We’ll have more details on all our stocks in Thursday’s regular update. Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
