Yesterday I published my mini manifesto about Google and what I see as a potential index effect. Then today came news about them selling $4 billion worth of stock in a secondary.
I have to say that after ten and a half months of blogging I am surprised that this hasn't happened before, egg on my face the day of or day after I stick my neck out on something.
My average price from August 1 is $288.48. The lowest price I think I saw this morning was around $272, but it has come back a little since. The largest weighting I have for any client in the name is 1.5%. The impact for clients with a 1.5% weight, at $272, is 5.7 basis points for their entire account.
Hey, I wish it weren't down but I think I measured the risk before I entered the position and I am not sweating the stock in the $270s. If something unique to Google takes the stock down to $250 I would probably have to reassess.
This little episode will not discourage me from sharing my process in the least. I have written countless times that I try to be right more often than I am wrong. I'm not sure I am actually wrong on Google at this point. I think what this will mean is that I will have wound up with a bad entry point.
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3 comments:
Based on fundamental analysis of Google's expected earning streams, etc., what would you say is its fair value?
Mr. Nusbaum,
I have been reading your blog for some time now and appreciate your openness and desire to help people. I would say I was rather surprised upon reading about the investment in GOOG. While the posting did explain your process in terms of limiting the allocation and risk, it did not (unless I missed it) explain the selection of this particular stock - ie. valuation, momentum, every broker on Wall Street loves it, etc. It is, to me, a curiousity among the other stock selections mentioned in your blog.
to annonymous,
please read my first post about GOOG, that explains it.
your comment about other stock selections on this site is interesting. I am quite agnostic about a lot of things related to stock selection. At some point owning a lot of high octane names will makes sense from the top down and that is where I will position clients.
the last couple of years has been about foreign, emerging, resource, small cap and value so that is where I have been overweight. I will overweight anything, if I think that is what will do best.
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