Reduce Position Sizes in HCAT and MODN
This is the type of day where you’d typically want to be just watching and waiting, or even doing a little buying. But we have two positions that are at or near prices where we need to take some action.
Accordingly, I’m recommending you sell half your position in both Health Catalyst (HCAT) and ModelN (MODN). These actions will leave us with a half-sized position in each.
Stepping back, clearly this is a wild market and there is a lot of concern out there. With big swings in certain asset prices we will likely see some unanticipated follow-on effects. It’s nearly impossible to pinpoint what those are ahead of time, however.
Big picture, our experience with stocks, and mine in small cap stocks, has shown that a steady hand pays off. While it can be tempting to match big moves in the market with equally big decisions with your investments, that type of behavior doesn’t typically yield very good returns over the long-term.
Right now, we’re seeing a lot of short and intermediate-term indicators at extremes. This could lead to a significant upside move at any moment. Let’s continue to do what’s worked so well in the past; make incremental moves that help keep us exposed to the best small companies out there so that when it comes, we participate.
In the meantime, I’m closely monitoring all of our positions throughout the day.