Trade Alert: exiting this fast fortune + the best, worst kept secret of 2020
17th September 2020 |
As an investor you’ve got to ensure that you stick to a strategic plan with your investments. It is always unique and specific to you and you should always ensure you have a plan and make sure that it’s reflective of the goals you’re trying to achieve.
I strongly recommend if you haven’t got a plan in place, get one, sort it out and stick to it.
From my perspective, part of managing a plan is knowing when to clip profits off investments, even if you’ve got a long-term strategy in place for them.
In that sense when SunRun Inc (NASDAQ:RUN) was recommended in March, a 12-month target of $50 was put on the stock, with the potential of the stock to trade at $100 over the coming three years.
Well SunRun has comfortably punched past $50 and at the close last night was trading at $62.33. Since its recommendation it’s now showing a 207% return.
At this point, it’s exceeded expectations in that it’s achieved the 12-month target in just six months. I think that kind of speed of return puts it in a position now that it’s time to take this fast fortune and exit the stock.
That’s why I’m recommending to SELL your stake in SunRun, cashing in that 207% return.
Yes, we could sit in the stock longer, and we could be cashing out too early stretching for that $100 target in three years. But the way in which SunRun’s stock price has delivered in such a short period, I think the smart move now with a 207% gain on the boards is to take those profits off the table.
Of course, the ultimate decision as to how much you sell, if you sell at all or if you leave a potion in the stock, is up to you.
But managing capital risk and knowing when to exit a winning position isn’t an exact science. But we’ve seen time and time again a stock can rise very quickly delivering fast returns and the little “greed monster” on your shoulder will say, “Just a little longer, there’s more to come.”
But thinking with our rational brains, the time to take profits from SunRun is now. It’s achieved what we expected but in half the time and for that reason with such a great, fast return, it’s time to exit this position.
Action to take: SELL SunRun in the market. It’s a liquid stock so you should easily find an exit trade through your broker.
I was right – but it wasn’t a big surprise
On 6 August I wrote in your weekly update,
… next year in the new Formula 1 2021 season, Racing Point will no longer exist. Stroll’s team will be the Aston Martin Formula 1 racing team. Straightaway that puts the Aston Martin name and (what I expect to be) iconic colours back in front of a global audience.
The suspicion is that next year, four-time F1 world champion Sebastian Vettel (currently a Ferrari driver) will join Stroll at the Aston Martin F1 team.
This would bring another lift to the Aston Martin brand, name and vision that Stroll has for the racing team, and by default the company. It’s also another German to boost the foundations of the iconic British brand.
Well, I’d like to say I had the “inside word” on this development – but the reality is this was perhaps the best, worst kept secret in Formula 1.
There was no doubt Lawrence Stroll wanted a marquee F1 driver to head up the new Aston Martin racing team. And they don’t come much more marquee than a four-time F1 world champion.
Last week Racing Point Formula 1, to become Aston Martin Formula 1, announced that Sergio Perez (one of their current drivers) was out, and Sebastian Vettel was in for 2021.
This is more than just a strategic move to get a quality race winning driver into the team. Part of Vettel’s deal is to become an “ambassador” for Aston Martin.
And considering Aston Martin’s ties to Red Bull Racing (where Vettel won his four championships), it all finally slots together into a complete picture.
The Aston Martin Valkyrie, its multi-million-pound hyper-car, was designed by Red Bull Racing chief technical officer Adrian Newey. Newey also designed every single car that Vettel won his championships in.
This does become a complex web of partnerships, deals, development, design and engineering. But the core point to all this is simple – Lawrence Stroll is bringing prestige back to Aston Martin.
And in bringing Vettel into the F1 team, the Aston Martin brand gets an immediate shot of energy and life back into it. This is one of the strategic puzzle pieces that we expected and has played out as such.
The next proof in the pudding for Aston Martin is going to be the sales numbers for the DBX SUV. If this SUV can be the spark that reignites Aston Martin as a global aspirational brand to be desired in the highest end of the luxury market, then Stroll and his moves to reinvigorate Aston Martin might just pay off.
For now, it’s tracking as we’d expect, and the Vettel announcement even saw the stock price spike sharply just a little preview of what could be possible if all these behind closed door deals now pay off.
Aston Martin is still trading below our buy limit, hence it remains a BUY recommendation. I think it’s the perfect long-term stock to hold a position in your overall portfolio.
Regards,
Sam Volkering
Editor, Frontier Tech Investor
