Finding Opportunities in Large-Cap Financials and Tech: When Do You Sell Off Your Winners?

67 WALL STREET, New York - September 11, 2013 - The Wall Street Transcript has just published its Multicap Growth Investing Report offering a timely review to serious investors and industry executives. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investing in Financial Services - All-Cap Growth Investing - Disciplined Growth Approach

Companies include: Intel Corporation (INTC), Bank of America Corporation (BAC), Apple Inc. (AAPL), Hewlett-Packard Company (HPQ), Microsoft Corporation (MSFT), Morgan Stanley (MS) and many others.

In the following excerpt from the Multicap Growth Investing Report, an expert portfolio manager discusses his stock sales methodology:

TWST: What is your sell discipline and would you give us an example of a stock you recently sold and tell us what triggered the sale?

Mr. Resendes: Staying within the context of large-cap tech, I mentioned earlier that at the beginning of the year we held and owned a fairly substantial position in Hewlett-Packard. I believe at the beginning of the year, the stock was trading approximately $15. We began exiting that position in the last month and a half as the stock was trading in at $25. And the predominant driver of the sell discipline for us is first valuation; secondly would be if a stock is no longer meeting the criteria of what made it attractive.

In other words, within the context of the opportunistic part of the fund, valuation drives an initial decision to explore a stock and purchase it because it gives us a margin of error that we're just very happy with, and usually a valuation mismatch occurs because of an emotional mispricing in the stock, so that's what brings it to our attention.

Then we have to have a set of themes or catalysts that make the valuation attractive, so that there will be an opportunity to realize that value. With Hewlett-Packard, we began buying it after a sharp sell-off. Once management made the decision to purchase Autonomy, immediately there was $10 billion reduction in Hewlett's price, and we started looking at the stock...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.