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Constellation Software Inc. (CSU $3,691.08)
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Topicus.com Inc. (TOI $138.00)
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Lumine Group Inc. (LMN $33.50)
Not sure, if some of this selling could be assigned to algorithm trading ( stop loss orders) ?
You have been a huge supporter of the stocks, and for good reasons, through the recent selling ( AI concerns and M Leonard departure related ), even highlighting CSU, as one of your Best trading ideas,
Based on your comments and most analyst ratings, these concerns are overblown and stocks should recover, in due course, as, apparently, nothing has fundamentally changed and business is as usual. However, market seems to think otherwise and price action has just been horrible.
While some investors are probably selling not to lose their built in profits over years, there could be others harvesting tax losses.
Interestingly, it is noted that these stocks generally have a bad day when AI related Companies are enjoying a nice bump, like Today ( Wednesday). And AI related boom is likely to continue to drive the markets, at least in the foreseeable future.
We are in the camp of concerned investors, with significant embedded gains in these companies, as early investors, and are worried, if we should liquidate our positions, at least partially ( half or 1/3rd ), to protect our gains. What are your thoughts ?
It looks like that a string of catalysts is needed to infuse life back into the three stocks ( specially CSU ). What could these be, in your opinion and how long would you recommend for investors to be patient ?
Thank You
We can't personally direct answers, but would note that a declining stock price does not always mean problems. Certainly we do not like negative momentum, though, and selling can beget more selling. We do not expect problems from the group, but problems could still occur. If concerned, we would consider the reasons behind the concern. In our view the concern is not noted in the financials, so far. There are concerned investors because others are selling, and the stocks are not going straight up as they usually do. None of this is fun, but it does not automatically mean something is 'wrong'. Some catalysts, such as more acquisitions and/or strong earnings, would certainly help. Much really depends here on exposure. We remain comfortable, but think two to three quarters will be needed for patient investors. We do not think the AI fear will result in serious implications for the group, but this may not be known for even a longer period of time. If exposure is high enough to merit concern, we have no problems with an investor reducing exposure to a comfort level for them. But we would view none of them as SELLs at current levels.