TRADE ALERT: selling a number of positions in the portfolio
4th May 2020 |
I have prepared a lengthier note in this month’s Frontier Tech Investor letter but before that goes out, I have some urgent trading instructions.
Heading into last week, we had seen an impressive rebound in the tech-laden Nasdaq-100. That saw the mega-cap stocks perform admirably and it dragged the wider market higher too. However, the majority of the advance was powered by smaller investors while institutions have been taking a breather from buying.
Warren Buffett jumping in to buy positions, on very favourable terms in Goldman Sachs and General Electric, back in 2009 was a signal that supported the decision by other investors to also buy.
I therefore think this is a good time to take some profits and to cut losses among our positions.
The trade spat between the US and China is amplifying again, with China being blamed for spreading the virus to the whole world. It’s likely that there will be some selling pressure in Chinese stocks as a result. I recommend selling Dianping.
Action to take: sell Meituan Dianping
Ticker: 3690 HK
Bought at: HK$73.55
Sold at: HK$100.70
Profit: 36.91%
Generally speaking, demand for cannabis has increased during the lockdown period. However, Aurora Cannabis has not rallied. In fact, it remains very weak. That has convinced me of the unlikelihood the share is going to recovery. I recommend taking the loss on the position.
Action to take: sell Aurora Cannabis
Ticker: ACB CN
Bought at: CAD$12.35
Sold at: CAD$1.01
Loss: -91.82%
Becton Dickinson failed to sustain its breakout earlier this year and rebounded nicely from its lows to retest the 2018 and 2019 highs. The portion of the medical sector that focuses on the treatment of coronavirus is the best performing at present. Unfortunately, Beckton Dickinson is not in that category. It is now time to take the profit.
Action to take: sell Becton Dickinson
Ticker: BDX US
Bought at: $221.35
Sold at: $251.87
Profit: 13.79%
We bought Northrop Grumman in 2017, on the basis that it would benefit from the space sector’s evolution. The statement last week that NASA has signed deals with both SpaceX and Blue Origin to ferry astronauts to space means Northrop Grumman is not an immediate beneficiary from this market evolution. I recommend taking the profit on the share.
Action to take: sell Northrup Grumman
Ticker: NOC US
Bought at: $301.86
Sold at: $328.06
Profit: 8.68%
I bought Superconductor Technologies as a moonshot on the fusion sector. Innovation continues apace but it is looking increasingly likely that Superconductor Technologies has failed to capture the market potential represented by the opportunity. I recommend taking the loss on the position.
Action to take: sell Superconductor Technologies
Ticker: SCON US
Bought at: $9.60
Sold at: S0.24
Loss: -97.51%
Visa makes money on every transaction that crosses its network. The problem right now is that with the recession continuing to unfold, the number of transactions is likely to contract. I recommend selling the share until there is evidence of economic recovery.
Action to take: sell Visa
Ticker: V US
Bought at: $136.06
Sold at: $175.57
Profit: 29.04%
We have been holding SolarWindow for as long as the service has been active. Unfortunately, the share has not rebounded with the wider renewable energy sector. That’s not a positive sign. This is an illiquid share but I am now moving it to a sell recommendation, which means sell whenever you have an opportunity to.
Action to take: sell SolarWindow
Ticker: WNDW US
Bought at: $3.96
Sold at: $1.38
Loss: -65.15%
Of our remaining positions, the big question I have is how well they hold their recent gains during what I expect is an unfolding pullback. I am confident of their continued ability to outperform over the medium term but I want to see evidence I am correct before introducing new buy-up-to levels.
All the best,
Eoin Treacy
Investment Director, Frontier Tech Investor
