Here’s a quick update on a sale in my portfolio. Sales are always hard, especially when times are good and investors are riding the coattails of one of the best performing bull markets in modern times. When things are rosy, we tend to feel that the good times will continue forever. How many times have we heard from various commentators in the media that this market will never go down, or we will never see a financial crisis in our lifetimes. It is this kind of hubris that sends me running for the hills.
Regardless, its the insane valuations for some of the stocks that I regard as a selling point. What lies ahead…can the company keep its revenues and earnings rising year after year? This particular sale has been a hard one as I consider it an extremely strong company and want to continue holding for a long time. But you know what they say about falling in love with your investments…
I decided to sell and close my position in Canadian National Railway (CNR.TO). I sold my 52 shares @ CAD$105.00 after holding them for just over 3 years. Its a company that I really admire and I believe is the strongest railroad company in N.America. However, the valuations provide no hope of future performance unless we see a major correction in share prices. P/S 5.8, P/B 5.0, P/FCF 40.34 etc. I do not see how those numbers make any sense unless the company’s financials improve drastically with exploding revenue and earnings growth — something I do not expect in the railroad business.
Total profit: 28.6%
Holding period: 3.2 yrs
Full Disclosure: Our full list of holdings is available here.