Hi David,
Trimming and or progressively accumulating positions is a practice MM regularly adopts, though not always.
We look at a position against the reason we established the holding in the first place, if it still holds, we are likely to trim rather than sell outright. In the case of HCA, we’ve been active around this stock over recent years, initially buying at $US168, selling at $US286. Buying in again $US225, selling $US385 and buying in again $US310 in January this year, selling this week at $US493. It’s been good to us.
The premise for buying and selling HCA has always been around valuation. For a low growth business, HCA trades in a broad valuation range. In the the last 3 years its been as low as 9x and as high as 17x, which is where we are now. While the performance operationally has ticked up recently, and the stock could continue higher, we do think some of the multiple expansion has been a function of the market gravitating towards more defensive exposures into volatility. This has pushed HCA to new highs. We have several other positions on our hit list that have fallen recently, which we have earmarked for additon, and we want all the funds tied up in HCA to reallocate elsewhere.
- In short, whether we trim or sell outright is a function of our view on the stock, and the opportunities we see elsewhere for the capital.
