I have posted several articles and checklists on when to sell. See below.
It’s easy to say you should sell the company fundamentals have changed, but what does that mean, exactly?
To get a better idea of the thought process, there is no better way than to read letters to investors written by high-profile fund managers.
Go ahead and read Einhorn’s second quarter letter to investors. It’s this week's recommended read.
If you decide to read it later, here’s a paragraph on DELL, which is part of the top 10 2012 value stocks list, and down.
His thought process is impressive indeed. It is not clouded or biased. Just objective, rational and decisive.
We also closed several positions during the quarter. Dell (DELL) proved to be a disappointment. We had thought that the growth in the non-PC business would be enough to offset the deterioration in the PC business. The non-PC growth was smaller than we’d hoped and the PC deterioration was worse than we’d anticipated. While DELL has a good balance sheet, it appears likely that management will try to use much of the cash to try to buy its way into better businesses. At a minimum, this will erode some of the value cushion that the cash balance creates. We exited with a loss.
This is the type of elevator pitch that I’ll have to work on for both selling and buying. I could write pages of analysis but true skill requires boiling it down into its simplest form. A skill that Einhorn just seems to be born with.