Just in case you’re wondering why I want to sell one of them, quite frankly, you’re retarded. I don’t like being in the position that I am in. My basis on these 4 stocks are all very high and, realistically, if I do not put some real money behind 2 of them, I am going to be holding them for a long, long time.
So what’s wrong with holding them for a long, long time?
Well, I do not like the market to control me. I invest creatively and need to have moving parts in order to maximize my potential. Keeping me constricted to these four stocks has hurt me in many ways over the past 6 weeks.
I threw these stocks into The PPT to analyze their metrics, have a look.
As you can see, FEYE is down the most, while the other three are pretty much in lock-step to the downside, with a correlation around 1. I think the reason why FEYE is down more is due to a lower institutional shareholder base, which as you can see is markedly lower than the other three. In the social media poll posted in the previous post, the majority of you said to sell FEYE. The reason is pretty simple: it was the first option in the poll and has underperformed the other three.
As humans, we tend to avoid pain and most normal people avoid conflict (with marked exception to the lunatics in my comments section). So I expected FEYE would be tossed into the volcano. Quite frankly, I chose FEYE too, as it is my largest position and is the main source of loss for me, over the past 6 weeks. The size of my FEYE position is almost twice as large as the other three. Selling it will certainly leave a scar, but allow me to raise a lot of cash to be put to work smartly.
Even though FEYE has the highest growth, they also have less cash than the other three, lower gross margins than two of them and a much higher price/sales ratio.
But SPLK has the slowest growth, largest float and smallest short position, which is important to have if the market reverses higher. With YELP’s 9.4% of the float short, should this market rally, those fools will run for cover at the first site of danger–sending the stock screaming higher.
Another option would be to really leverage up and swing for the fences. However, that would be hard-core gambling and I am not up for the risk.
I guess it will come down to price action, at the end of the day. I will make my final decision by Monday.