Recent Sale

I normally do not sell the securities that I’ve purchased in my Portfolios as I’m into it for a very long haul and buy them only after careful consideration, unless, there are some exceptional circumstances as below:

  1. A significant drop or total elimination of dividends
  2. A display of inappropriateness by the company, be it management, or otherwise
  3. An apparent fraud or even outright cooking of accounting books

On Nov 23, I’d published a post where I made a bold move to buy additional 100 positions in American Realty Capital Properties, Inc. (ARCP) and I’d felt at that time that the management would be able to sort out all issues soon and it will be a great comeback story. However, things took a turn for worse for the company with the departure of top management including CEO, CFO and COO. If loss of one senior executive is not bad enough to indicate troubles within a company, loss of top layer executives was a hammer blow in my opinion in any aspects of running a company smoothly. In order to right this ship, it could take a long time to fix the accounting issues, settle lawsuits and other potential undiscovered issues, longer than I can wait for 😉

Initially, I thought of selling all my 175 positions, however, I finally settled to sell 100 positions and kept remaining 75 positions until further scrutiny. If the hoped for turn-around does start to appear on the near horizon, it will reward me handsomely and if there are appearances of further deterioration in the health of this company, I may completely exit my remaining 75 positions.

I sold 100 positions at $8.08 on Dec 17 and this reduces my dividends by $100.00 for next year. I’ll be looking to buy other high quality securities to add to my total passive income. The seriousness of this sale can be gauged from the fact that this is my only single post on sale for this year of 2014.

What do you think about my sale ? Did you sell all or kept some positions for potential turn-around?

Full Disclosure: Holds remaining 75 positions in ARCP.

Thanks for reading.

2 thoughts on “Recent Sale

  1. I cannot believe how the sentiment has changed so dramatically for ARCP over the past couple of weeks or so. After the fallout I was reading how many of the DGI bloggers were willing to keep their holdings, some bought even more and almost no one sold. Now, it seems selling ARCP is en vogue. There seems to be a slight herd mentality among the DGI bloggers and their actions. While my portfolio may not be the highest yielding on the block, it has served me well for many, many years. I know many like the high yielding REITs or MLPs out there (which I’m not against owning), it’s just that I feel most like to chase yield and often find out that these types of investments of other small caps don’t really have a long term holding status when compared to the “boring” low yield plays. Thanks for sharing. See you in 2015.

    1. Hi DivHut,

      Totally agree. Sentiments have indeed drastically changed for ARCP over last few weeks. I think that DGI blogging community is very smart to make their own decisions and sometimes some of the decisions do not pan out as originally envisioned. Reason is that with high rewards come high risks as they are intertwined. Calculated risks can be taken for few high quality & high yielding securities.In this particular case, there were unforeseen issues that none could visualize.

      When we invest in a company, we place a high level of trust with the company and expect management to honor their commitment to fellow shareholders but in some rare instances, shareholders’ trust is broken and that’s what I believe happened in case of ARCP.

      I buy a security for long term hold and monthly & yearly gyrations do not bother me much, however, in 3 situations mentioned in post, I would consider exiting ownership as if I’m owning a real business, why would I hold a business if the operating conditions change significantly. That’s exactly the reason I do not hold too much technology or financial companies as market conditions can change very fast before you even realize. However, REITs and MLPs (especially pipelines ones) are different: REITs own real properties and dividends are real and same goes for some MLPs, where anyone cannot simply go out and build pipelines from scratch soon, they have certain amount of monopoly and act more like toll roads.

      Appreciate sharing your views and adding value for other readers as well. Thanks for stopping by!

      Good luck for new year 2015!

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