STREET DOGS

When to sell … I would sell a security for one of four reasons. The first is the highest quality reason. That is when you buy something with a price objective. When it appreciates to that price objective, and you think it‘s fully valued, you sell it.

The second reason is when, based on calls to our companies, their competitors and their suppliers, things are not moving along the originally anticipated lines so you get out before you get murdered. It is very hard to make up for big losses, so you have to sell before you get creamed.

A third reason we sell is when we find an idea that‘s more attractive than the idea we‘re acting on already. So we‘ll sell something to buy something we think has a better risk-reward ratio.

Finally, the fourth reason we sell something is when our market outlook changes. Since I don‘t tend to buy and sell market futures to an appreciable degree, to effect this macro-driven repositioning I have to sell specific securities. [Then] there are those times when you‘ve made a fundamental mistake – you‘ve misjudged the company‘s competitive position, you‘ve misjudged the economy, you‘ve misjudged the stock market. I think you just can‘t afford to say, “I know more than the market. ”— Leon Cooperman

LET IT GO

One thing I learnt is the concept that there are no “holds”. Every day you’re either willing to buy more at the current price or, if you aren’t you should redeploy the capital to something you believe does deserve incremental capital. I sometimes hear: “If my target price is $45, why should we sell at $43?” The answer is simple: I believe we have better uses for that capital than getting the last few percentage points in the move from $43 to $45. Lee Ainslie