In a recent article, the author does not believe in the old stock-market adage of “Sell in May and Go Away,” but rather recommends taking the month to review and potentially weed out your portfolio. The author suggests selling stocks that have not appreciated in three years, those with price earnings ratios of 60 or more, companies that have posted losses in the past year, and stocks that have declined 20% or more from the purchase price.
Several large and widely held stocks are highlighted as potential candidates for selling. MicroStrategy Inc., primarily known for its software business, has heavily invested in bitcoin, which now makes up a significant portion of its market value. Carlyle Group Inc., a private equity firm, has seen declining revenues and may be overvalued. Cytokinetics Inc., a biotechnology firm working on treatments for muscular diseases, has a history of losses and high liabilities.
Boeing Co. has faced safety concerns and increased costs following two plane crashes and quality issues. The company’s liabilities exceed its assets, and only half of the past ten years have been profitable. Lyft Inc., a competitor to Uber in the ride-hailing market, has yet to show an annual profit and carries a high level of debt compared to equity.
The author’s previous sell recommendations from a year ago did not perform as well as the S&P 500 Total Return Index, trailing by ten percentage points. Clorox Co. declined, while Colgate-Palmolive Co. and Keurig Dr. Pepper Inc. rose less than the benchmark. However, International Business Machines Corp. and Salesforce Inc. outperformed the index. The author’s longer-term track record shows mixed results, but the average return on sells has been slightly higher than the S&P’s average.
It is important to note that the author’s column results are hypothetical and do not reflect results for clients. Past performance should not be used to predict future outcomes. The author also discloses that a hedge fund they manage owns put options on Boeing, indicating a bearish outlook on the company’s stock. Overall, the article provides valuable insights into potential stocks to consider selling in May.
