I’ve had LogMeIn (LOGM) at hold for some time now given that the company has grown out of our small-cap asset class and into more of a mid-cap stock, and because shares topped out early in 2018 and haven’t shown signs of moving materially higher since. I thought we might see the stock make a move higher after shares rallied up to their 50-day line last week, but they retreated again swiftly and have only moved lower over the last three sessions.
I like this stock, the management team is talented, and I’m confident shares will find firm footing and rise to great heights once again. But for us, LogMeIn doesn’t really fit anymore. The company has a market cap of $5.3 billion, is currently digesting two major acquisitions, and is becoming more of a growth and income story, with a small dividend (just over 1%) and roughly 10% organic revenue growth in 2019 and beyond. That profile is attractive for many reasons to a great number of investors, but it’s not a profile that fits in our wheelhouse. We are looking for faster growth, in smaller companies.
It would be one thing if shares of LogMeIn were performing. In that case I would hold on indefinitely. But given the lackluster performance and pattern of lower lows and lower highs, it’s time for us to move on. Our capital will be better invested in the next LogMeIn, and I have several viable candidates on my watch list!
If you bought when I first recommended LogMeIn, you’ve made around 75%, which is more than either the broad market or a small-cap index ETF has returned over the same time horizon. Book the gain. SELL.