My first sale of 2019. Sales are always hard, especially when times are good and everything seems to be going well for the investment in question. Personally, I have a harder time timing the sales than timing the purchases. When things are rosy, we tend to feel that the good times will continue forever.
Human psyche & investing seem to always fight each other on this front. We buy/invest when we feel good and sell when we are depressed about our investment picks. This sale has been especially hard for me as it has been my best investment to date.
I sold 1/3 of my position in Kirkland Lake Gold (KL.TO) at CAD$35.70 and booked a 228.5% gain in the stock.
Kirkland Lake Gold is one of the most successful stories in the gold mining industry over the last couple of years. I was lucky enough to get in early when Kirkland Lake Gold merged with Newmarket Gold to form the leading mid-tier gold mining company — my first purchase was in Feb 2017 at $8.79! Over the years, I had been accumulating more shares and averaging up with my full position ending with an average cost basis of $10.97. As mentioned, this stock is by far my biggest winner to date 🙂
Recent Sell Decision
- The biggest reason is risk mitigation. Kirkland Lake formed a very large portion of my overall portfolio. I decided that I had to sell in order to reduce the concentration.
- After selling this portion, I have taken my initial investment + some profit off the table. I can now let the rest of the holding in KL free ride as my cost basis is essentially $0.
- Kirkland Lake is one of the best run companies in the space and everything is going right due to flawless execution by the management, including a positive atmosphere for gold and gold mining companies in the macro/investing world; which is hard to come by. As mentioned, its hard to sell when everything is going right and the good times appear to continue forever, but I am taking a contrarian approach here and selling to take some profits.
- I also noticed that Eric Sprott has started selling a few shares and taking some profits. Sprott is the largest individual shareholder and chairman of the board — and I will take my cue to follow suit from the insider and one of the best investors in the space.
I am in no way turning bearish on this stock. I still hold a sizable position and KL still continues to be the largest position in my portfolio. The outlook for KL, gold and gold mining sector is bright and I intend to let this winner run to see how far it goes. Who know…perhaps KL will turn from a mid-tier to one of the majors; as the industry is already undergoing consolidation.
Full Disclosure: Long KL. Our full list of holdings is available here.