WHAT TO DO NOW: The market and especially leading stocks are still very choppy, with news-driven moves becoming the norm of late, and today we’re seeing another wave of selling in the names. Big picture, we’re still optimistic, but we’re taking things on a stock-by-stock basis at this point. Today we’re going to sell Shift4 (FOUR), which was hit hard yesterday after saying it received no worthwhile buyout bids and, without any bounce, we’re going to cut bait here, leaving us with 32% in cash. Details below.
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Leading stocks bounced yesterday but are again under the gun so far today –as of 1100 EST, the S&P 500 is off 0.1%, the Nasdaq is down 0.5% but most growth indexes and measures are off 2%, give or take.
We continue to see a lot of churn in the market and especially among leading stocks during the past few weeks—and now we’re beginning to see the sellers do some damage, with more than a few names that have been running for months test key areas.
To be fair, our Cabot Trend Lines and Cabot Tides are still positive, and we’re seeing a couple of non-tech areas (like retail and, more recently, some commodity names) perk up, so it’s not like the bears are running wild. But overall, we think it’s best to play things a bit carefully at this juncture.
Today, we’re going to make one move—selling our half position in Shift4 Payments (FOUR), which has been all over the place in the past few weeks, but was hit hard yesterday after the company rejected any buyout offers. Beyond that, though, our main thought is that we’ve given FOUR plenty of time to get moving and it hasn’t been able to, so we’ll cut bait and hold the cash. SELL
That’s our only move for now, but we’re keeping an eye on everything—we’re not eager to have a ton more on the sideline and we still think many leaders can and will be nicely higher down the road. That said, we could pare back a bit more if we see the sellers dig in, especially with some names that have had big moves.
The FOUR sale will give us about 32% in cash, which we’ll hang onto for now. We’ll be on the horn if we have any other changes going forward.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
