Back in September, I made my case for the “other HP,” Helmerich & Payne. Since then, HP has advanced from $46 to over $52. I still like the company, and I think the stock will advance further long term. That being said, this is not a bad gain for a few week’s time, and it’s reason enough to start ringing the register. You don’t need to close out your entire position, but I think it makes sense to start taking some profits. As the always entertaining Jim Cramer says “bulls make money, bears make money, but pigs get slaughtered.” There’s no sense in being greedy, so take some money off the table.
Keep in mind, I haven’t converted into a born-again stock picker. I comment on attractive opportunities when I come across them, stocks or otherwise. However, good opportunities are few and far in between (they also don’t come with guarantees). That’s one of the main problems with using security selection as a primary investment strategy; there are never enough good securities! By waiting around and cherry picking only the good ones, you could end up missing out on a whole lot of market action (beta). That alone can cause you to underperform even if your picks end up being good. The longer the time period, the more likely this is to be true. The point is, any stock picking (or security selection in general) we do is supplementary and secondary to our primary asset allocation strategy.
We’ve posted plenty of information on this blog and on our website about why we do what we do. Free feel free to contact BCM with any questions.
Victor K. Lai, CFA
This blog is for informational purposes only. Nothing on this blog constitutes investment, tax, or legal advice. You should conduct proper due diligence and / or consult with professional advisers before making any investment decisions. Victor Lai does not hold any positions in HP. Clients of Bellwether Capital Management LLC may hold long positions in HP.