When Should You Sell Annaly Capital Management, Inc. (NLY), General Electric Company (GE), Hasbro, Inc. (HAS)?

Page 2 of 2

The combination of the company’s stock price rise and its missed forecast make Hasbro, Inc. (NASDAQ:HAS) no longer the deep bargain it appeared to be when it was first picked. Still, Hasbro’s original purchase price had such a large margin of safety built into it that the stock hasn’t reached into overvalued/sell territory yet. If it does, Hasbro, Inc. (NASDAQ:HAS) — or any iPIG portfolio holding that exceeds its value estimate — can be sold.

Radically changing operations: Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) is one of the only companies that was ever able to radically transform itself. What started as a struggling textile manufacturer has turned into one of the world’s largest and most successful insurance companies, thanks to Buffett’s incredible capital allocation skills.

Buffett’s capital allocation genius that saved Berkshire Hathaway is the exception, rather than the rule. As Buffett himself has pointed out, most “turnarounds” don’t ever turn around.

What comes next?
The iPIG portfolio is currently around 85% invested, with about 5% waiting on the stock that might get away, and the rest waiting for the right opportunity to come around. If the market throws out another bargain company that meets the iPIG portfolio’s dividend, valuation, and diversification standards, it will be bought. On the other hand, if the market continues to rise, any company currently held by the portfolio is a candidate to be sold once it gets too far past a reasonable valuation.

The article When Should You Sell These Stocks? originally appeared on Fool.com and is written by Chuck Saletta.

Fool contributor Chuck Saletta owns shares of General Electric, Annaly Capital Management, and Hasbro. The Motley Fool recommends Berkshire Hathaway and Hasbro. The Motley Fool owns shares of Annaly Capital Management, Berkshire Hathaway, General Electric, and Hasbro.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Page 2 of 2