Loading...
Symbols:
Authors:

Copart Rated a Sell

by: Robert Freedland October 06, 2008 | about stocks: CPRT / RMD    

Robert Freedland

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

On Monday morning I sold my remaining 180 shares of Copart (CPRT) at $33.7488. My cost basis was approximately $33.72, so this was essentially a sale at 'break-even'. Copart has 'come back' somewhat since my sale, another case of my own bad timing, and is currently trading at $34.80, down $(2.84) or (7.55)% on the day.

With my own sale of shares, and the overall weak tone of the market, I cannot in good faith rate this stock a 'hold' even though there is nothing wrong that I am aware of, rather the stock is sinking along with the rest of the market. Thus:

COPART IS RATED A SELL

If the market tone should improve, as long as there is no adverse news from this company, I would in my own amateur way be upgrading this stock. One has to wonder if there are any stocks truly worth rating 'hold' today! As I wrote this, the Dow was at 9,802.01, down (523.36) on the day, and the Nasdaq was at 1,829.34, down (118.05).

This sale Monday was not based on any particular belief of mine about the company, the stock, or the stock market tone or decline. Instead, the sale was triggered by my own trading rules governing sales of holdings.

Let me explain, after an initial purchase of stock within my portfolio, I set a limit of (8)% prior to selling my holding completely. I also sell portions of shares as they appreciate - currently selling 1/7th of my holding if the stock should appreciate 30, 60, 90, 120, 180, 240%, etc., at each of those levels.

The tricky part comes in when selling a holding after a partial sale or two of a stock. This is what happened with Copart . After my initial purchase of Copart a year ago on 9/27/07, at approximately $33.72 (the 210 shares were purchased in two lots, pennies apart in cost), the stock went ahead and appreciated enough to trigger my first sale at a 30% gain on 5/29/08.

Since I had a sale at a gain, my tolerance for a loss was raised with my sale point moved to 'break-even' instead of an (8)% loss level. And that was exactly what happened Monday morning.

So I am now down to three positions, two under my minimum of five. Thus, I technically have a 'buy signal', actually two 'buy signals' but instead of buying anything, I am sitting tight, licking my wounds, and watching as my ResMed (RMD) stock approaches that (8)% loss level for me and gets unloaded. Ouch.

We have a very ugly stock market to deal with. I shall continue to share with you my thoughts, actions, and observations. (I feel a little like the radio-man on the deck of the Titanic announcing the progress of the iceberg.)

Where does this lead? I don't really know. I do know that my own crazy system is doing what it is supposed to do. It is leading me out of equities into cash, perhaps keeping my capital a little bit intact as the great bear of this correction ravages the account values of little investors like me across this nation.

Disclosure: The author sold his CPRT at $33.7488.

Related Articles

This article has 8 comments:

  •  
    Oct 06 04:10 PM
    What a misleading title. You're basically saying that your "Sell" rating on CoPart is due to "bad market conditions" and "poor short-term stock price performance relative to my purchase price?" You even flat-out say there is nothing wrong with the company.

    Please title your articles appropriately. For anyone but a profit-taker or loss-stopper, this article should be titled something like, "CoPart stock price succumbs to general market weakness."
    Reply
  •  
    Oct 06 11:47 PM
    I agree with the previous comment: this is an irresponsible title choice. One gets the impression, reading the title as it appears under Yahoo Finance, that a brokerage house - not a doctor who invests his own money - is actually rating this stock 'sell'. You should exercise more restraint, especially in this market.
    Reply
  •  
    Oct 07 10:37 AM
    The article is well written and articulates the authors positions and thinking well. However the choice of title is not well especially in this market.
    Reply
  •  
    Oct 08 07:54 AM
    Great comments. I do not pick the titles of the entries. They are taken from my blog and Seeking Alpha thankfully assumes the role of editor. Please be aware of that.

    As part of my blog, I have chosen when I comment on a stock to put in my five cents as to whether the stock is rated a "buy, sell or hold". When and if a more healthy environment in the financial world takes hold, Copart is a company I would hope would find a place in my own portfolio. As I tried to explain, I am having difficulty selling a stock from my holding and with a straight face tell readers they should either 'buy' or even 'hold' the same stock.

    I am sure that you all, many of you who are more sophisticated in financial evaluations, will understand my own dilemma.
    Reply
  •  
    Oct 08 09:26 AM
    This guy is obviously a fool Copart is a strong company that is set for the hard financial times ahead and is actually planning steady expansion regardless of the economy you should be buying Copart and holding it.
    Reply
  •  
    Oct 08 09:30 AM
    Sell what!
    I bought at 38.20, 43.75, 37.00 and now it's at 33.74.
    All the experts were saying buy, buy, buy. An ameoba knows more about the market than the "Experts"! So why don't you keep your wisdom to your self?
    Reply
  •  
    Oct 09 08:54 AM
    Viking2boot just hold on to it once the government gets done screwing up the market worse than it already was screwed up your Copart stock purchased at any price will be gold in your portfolio.
    Reply
  •  
    Oct 09 12:26 PM
    Thanks for the encouragement, I was going to jump out the window but I have a basement apartment.
    Reply
More Comments on CPRT ยป
More by Robert Freedland
Investment Resources
Money Managment
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Earnings
Car Parts
Autos
Aircraft & Parts