Time to Lighten Up a Little
Our first move in 2020 is going to be to modestly reduce our exposure by dropping a few stocks that are looking weak right now, including one partial sale in EverQuote (EVER), and fully stepping back from Quanterix (QTRX) and Veracyte (VCYT). Details below.
EverQuote (EVER) has been a rocket ship for us. We jumped onboard in June (just six months ago) and shares have blasted higher on multiple occasions, at one point pushing our paper gain to over 200%. We sold a quarter position in September for an 83% gain, and today, with the stock looking a little sketchy and trading down around 10%, I want to sell another quarter position at what should work out to a roughly 160% to 170% gain. There’s no public news driving the selloff and EVER could easily snap back (which is why we’re not completely stepping aside). But with such a big gain in such a short period of time, and in light of the technical weakness today (EVER is breaking below its 200-day line on above-average volume) the prudent thing to do is take another partial gain. Selling another quarter position will leave us with a half position. Sell A Quarter
Quanterix (QTRX) has huge potential but the stock just can’t seem to get going again (it’s 37% off its June high). The company has a lot going for it in the life science research market and may well expand into clinical markets as well. However, even at the current growth trajectory (in the 30% to 40% or greater range) it will be several years before Quanterix can turn a profit. Without a clearer path forward there is potential that the stock could flounder for a while, in which case we don’t really want to be in it. On the flip side, it could easily be acquired at a very handsome premium and/or progress on new instruments/technology (up to 100x more sensitive) could drive higher instrument and consumables sales. We have a very modest loss of 10% on our remaining half position (we took a 5% loss on the first half in September) and right now I just want to step back completely and see what QTRX does. It will remain on my watch list for possible addition back to the portfolio in the future. Sell Remaining Half
Veracyte (VCYT) hasn’t performed well for us since we jumped into the stock last July. Part of that is just bad timing—VCYT literally hit an all-time high soon after I recommended it and has done little since. Unfortunately, buying a stock near an all-time high that’s lost momentum means it’s easy for a small loss to turn into a bigger one. Today, VCYT dipped below its 200-day line and last time that happened it cratered to 20 (20% below where it is today). Granted, that was after an earnings announcement, so I don’t see that scenario playing out right now. But still, we just don’t have much wiggle room to play with so the prudent thing to do is cut VCYT loose at a modest loss and put it back on the watch list. Then, if it does fall to 20 or so again, we can be opportunistic buyers if we wish. SELL