Wednesday, August 17, 2016

Sell Hain Celestial

I thought about it all day, night, and into this morning.  What was I going to do with the portfolio's Hain Celestial holdings.  The news wasn't good, and the subsequent 27%+ drop felt even worse. 

It feels bad for a number of reasons. One I had such high hopes for the company especially following the WhiteWave acquisition.  It made me feel good to see other big CEO's were seeing opportunity in the healthy food sector.  Second is I use and love some of their products because I believe that higher quality, healthier food, is better for our bodies. Yet it's not always good for the investment pocketbook :(

It feels the worse to know you were just dead wrong on something. It's never easy admitting you were wrong on a company.  Either way I decided to meet halfway on my decision to sell.  I decided to sell half the shares in the portfolio.  For bookkeeping purposes I'm selling the first "add" from when I started this endeavor.  Remember the first add when I started this site in October does not represent my actual buy prices. They represent the price of the stock that day.  The reasoning was I felt it was improper to include my original buys since some holdings had already been held for years, and I only decided in October 2015 to take my tracking online. It just didn't seem fair to bring that past success into my performance. Instead I was willing to show that over time as I made more picks I could still beat the market. 

That will bring the total HAIN portion of the portfolio to less than 1% of the holdings, which I feel comfortable with. I still think the company has products that are very valuable. I also think that in 5 years there are a few scenarios that could be played out.  One is the company could still receive a buyout offer after this clears up.  Second is I think this will force management to refocus on it's strategy.  I'm hoping they cut a few more brands, and reinvest in their best performers. That I think they can do.  So I don't want to completely miss out on any future upside, but I am not willing to have as much capital on the line.  That would have been a good thought last week!

I do think this will all take quite some time to clear up. And judging from the technical damage on the chart possibly over a year is my best guess.  Plus it remains a real possibility the multiple investors are willing to pay for earnings will decline. That will keep a lid on the stock as it was already fetching a higher premium.  In the mean time I could be missing out on plenty of other investing opportunities.  A few examples in my opinion right now are DEO & EMR.  It keeps getting harder to find value in this market, but with our current holdings these two stand out.

*Shares were sold at $38.00

No comments :

Post a Comment