As the old saying goes, “Sell in May and Go Away,” many investors are looking to weed out their portfolios during this time. According to one expert, it may be a good idea to sell any stock that has not seen price appreciation in three years, any stock trading at 60 times per-share earnings or more, and any company that has posted losses in the past year unless profitability is expected soon. Additionally, stocks that have declined 20% or more from the purchase price should be carefully evaluated to determine if the original rationale for purchasing still holds.
Some large, widely held stocks that may be worth considering selling include MicroStrategy Inc., Carlyle Group Inc., Cytokinetics Inc., Boeing Co., and Lyft Inc. MicroStrategy’s stock relies heavily on the company’s holdings of bitcoin, which could potentially dilute the value for current stockholders. Carlyle Group Inc., a private equity firm, has seen declining revenue and increased borrowing costs. Cytokinetics Inc. has been focused on developing treatments for muscular diseases but has posted losses in 13 of the past 15 years. Boeing Co. has faced safety concerns and production challenges in recent years, leading to a slowing down of sales. Lyft Inc., a competitor to Uber, has yet to turn an annual profit and carries a significant amount of debt.
The expert, who offers sell recommendations annually in May, has seen mixed results in the past. While some stock picks have trailed behind the benchmark index, others, such as International Business Machines Corp. and Salesforce Inc., have outperformed. Overall, the average return on his sells has been slightly higher than the benchmark index. It is important to note that these results are hypothetical and may not predict future performance. Additionally, the expert discloses that a hedge fund he manages owns put options on Boeing, indicating a potential bearish outlook on the stock.
In conclusion, May may be a good time for investors to evaluate their portfolios and consider selling stocks that may no longer align with their investment goals. By carefully assessing each stock’s performance, revenue, and potential for profitability, investors can make informed decisions on whether to hold onto or sell their holdings. While past performance does not guarantee future results, it is essential for investors to stay informed and make strategic decisions to protect and grow their investments.
