Portfolio pruning

On 02.06.10, In Uncategorized, by David Pinsen

There are few stocks that I haven’t blogged about in a while. These aren’t big positions for me and they don’t interest me much now. They aren’t conviction picks for me now, just stocks I bought a few years ago and I had mostly held onto1 since then. I went through my accounts late Wednesday night and put stop limit orders on my dozen-or-so non conviction picks (except for a couple of OTC stocks I can’t put stop limit orders on). Thursday and Friday I got stopped out of two of those stocks, Vaalco Energy (NYSE: EGY) and Exxon Mobil (NYSE: XOM). Good riddance. A pretty good company and a great one, respectively, but I’m glad to have fewer long positions.

1I had sold about 10% of my EGY position between $7 and $8 per share.

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  • ndl11
    Do you still own PNI Digital?
  • FYI, they are having their conference call tomorrow @ 4:30pm if you didn't get the e-mail from their IR or see the headline on Yahoo! Finance.
  • Yes, I still own it. Like HEM, it's down from where I bought it, it's not a significant position for me, and I haven't spent much time thinking about it recently. I've mainly continued to hold both out of inertia. I should make a decision to buy more, hold, or sell fairly soon.
  • Hi David,

    Do you still have an interest in Hemisphere GPS ? Like you wrote in one of your post a year or two ago, this small cap is a bit like the "Alloy Steel" of the ag busines.
  • Hi Philippe,

    I still own it. And yes, in the sense that it is sort of a "picks & shovels" play on agriculture, it is like an Alloy Steel of the ag business. But the company's execution over the last year and a half has been disappointing -- not just to me, but to Edelheit, as he has mentioned on his blog. Last I corresponded with Edelheit about this company (last fall) he said he was encouraged by recent pronouncements from the company and was going to give it some more time.

    I should spend a little time revisiting this one, to decide if it's worth buying more of it, continuing to hold it, or selling it.
  • Sales were surely disapointing but so it was for a lot of company in 2009. It's not clear for me that it is related to company's execution but maybe I am missing something...

    I also own the stock and I'm ready to give them one more year to see if their sales pick-up along with the economy. If not, I will then suspect that they may have a problem with their products and/or execution.
  • What about the company's acquisition of Beeline? Has that yielded the intended rewards? It's been a while since I've drilled down on this one. I also need a refresher on what separates HEM's products from those of its competitors.

    I remember I liked the concept that demand for precision ag equipment should rise as the costs of inputs (energy, fertilizer, etc.) rise. Perhaps that will still be the case. I need to do some more homework on this one to decide whether to continue to hold, sell, or buy more.
  • They don't report Beeline numbers separately so it's hard to tell. My guess would be that Beeline experienced the same disapointing sales than the rest of the business.

    As for the concept of precision ag, here is a quote from one of their executive Kip Pendleton : "What we call "precision farming" right now will be called simply "farming" in a few years from now".
  • Philippe,

    I asked Edelheit about HEM on his blog yesterday, and he said he thinks the company is cheap and will have a good year today. But he didn't answer my question about why, if an investor is bullish on precision ag, he should buy HEM instead of one of its competitors. What are your thoughts on that question?
  • It's a very good question but also a tough one to answer... I would say that HEM is a pure play on precision ag with a very low market cap. This is not the case with a company like Trimble which is a broad gps play

    It is also not super clear for me what are the advantages of HEM products compared to its competition. Management said they were well positioned in the low-end and middle-end of the market but had some challenges in the high-end segment. They expect that their new products will strengthen their position in that segment.

    That said, I think that precision ag will be a bigger pie in the coming years and that more than one player could be successfull. We should also keep in mind that HEM could be an acquisition target for a bigger player.

  • "It is also not super clear for me what are the advantages of HEM products compared to its competition."

    You and me both, Philippe. I guess we'll have to judge its performance relative to that of its competitors in the precision ag space going forward. Or perhaps there is another pure play on this space we can find, one that is consistently growing earnings but is too small to have gotten much attention yet?
  • Perhaps Mr. Pendleton will be proven right. But will it be his company that benefits from this, primarily, or will it be a competitor such as TRMB? Maybe both. I have to look into this again.
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