Over the past week or so, I raised cash to 25%. This was good fortune, as HCLP, my mantelpiece position, has dropped 8% since I let up.
Today, I repurchased half of those shares, which I sold at $64.19 each, for $59.39.
It seems like good enough of a bet to me. HCLP is growing so fast… it’s trading at just over 17x Q3 2014 earnings estimates. I have no good way to guess what HCLP’s earning’s potential is over time; but 17x doesn’t seem unreasonable, particularly with a steady announcement of 5 year supply agreements being announced and 200% revenue growth last year. When you’ve managed to get in on the ground floor of such a high flying position, it just makes sense to hold long a core stake, and ride the waves.
This 8% drop is just another opportunity to make extra money, until such time as that logic is challenged. For the moment, HCLP just managed to touch its 20 day moving average for the first time since early June.
Next earnings announcement is in August. So tell me, who wants to stand in the way of this thing?