Some portfolio updates
If you have followed my work for a while, you’ll know that I rarely sell and strive to find companies I can hold forever. “Striving for” and “achieving” are different things (sort of like “intentions” and “actions”), so it’s natural to come against some companies that, for XYZ reason, we eventually end up selling. What does this mean? Striving to hold a stock forever is not the same as actually holding your positions forever (i.e., #neversell). There are not many companies in the world that will ever achieve or deserve never sell status and we must have this in mind when thinking about selling. The difference is relatively straightforward, but you’d be surprised how many people confuse both!
I’ve always thought that no portfolio is safe from mistakes. If an investor does their job correctly, searches for these mistakes, and acts on their findings, any portfolio will have a turnover rate (however small it may be). You can even have turnover while being 100% correct (in an ideal world) just because you feel there’s a better opportunity elsewhere.
Since the launch of Best Anchor Stocks (January 2022), I have included 18 companies in the portfolio. I still hold 17 of these and have only sold occasionally. I sold my entire Five Below position, acknowledging I had made a mistake. Much of my thesis revolved around the CEO (Joel Anderson), as execution in the retail industry is key. I sold my shares at $80 (the stock currently trades at $90 or so), and only time will tell if it was a good sell. Five Below is the only position I have completely sold out of (but it won’t be the last one).
I have also trimmed several positions throughout this period, namely Adobe and Intuit. I recently trimmed Intuit for valuation reasons, and I trimmed Adobe a long time ago on valuation and competitive (Figma) concerns. I have since repurchased some of my shares at what I consider to be attractive prices. I always try to minimize selling due to tax implications, and the fact that I have had to think twice before selling due to such implications has been beneficial to my investment returns (thanks to the asymmetric nature of stock returns).
In this article, I will discuss a position in my portfolio that I will sell out of. Non-coincidentally, this position and Five Below are the two positions I have always felt fit the least with my investment philosophy (out of all my portfolio companies), and I acknowledge I’ve waited too long to take care of it. Selling is tough, and any investor is subject to biases.