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Westwicke Blog

The Westwicke Blog is designed to deliver information and insights into the ever-changing world of investor relations and the capital markets, with a specific focus on the healthcare industry.

Top 10 Reasons Why Portfolio Managers Sell Your Stock

Posted on March 13th, 2013. Posted by

Top 10 Reasons Why Portfolio Managers Sell Your Stock

Our clients often ask, “Why did account X sell my stock? Our last meeting with them went so well.” Generally speaking, there is one reason investors buy a stock: the assumption that its price is going up. There are, however, countless reasons why stocks are sold.  Sometimes when a company’s fundamentals seem to be improving it’s not always clear why a portfolio manager might sell a particular stock.  We want to shed some light on the factors that can lead to the “sell” decision via this month’s Top 10 list.

  1. Locking in gains. No one has ever been fired for locking in gains. Even an investor who’s held your stock for years can’t be faulted for taking some money off the table.
  2. Macro concerns or sector rotation. Even for a company that derives zero revenue from Europe and does not sell directly to the federal government, events like foreign debt defaults and sequestration cause fund managers to lighten up on stocks.  In uncertain times, cash is king!  Similarly, depending on the outlook of the firms’ economist, portfolio managers shift money between sectors, increasing and decreasing their exposure based on the economists’ suggestions. If healthcare is deemed an underperforming sector at a particular time, your stock might be caught in the sector rotation. Continue Reading

Step Away From the Ticker Tape—Avoiding Stock Price Overload

Posted on February 26th, 2013. Posted by

Step Away From the Ticker Tape—Avoiding Stock Price Overload

Smaller-cap companies, like many of those in the health services, life sciences and medical technology sectors, experience more volatile stock price action than some of their mid- and large- cap peers. These small companies tend to lack the liquidity of larger firms and are therefore more vulnerable to news events (and often, big price movements will occur for no reason at all). For the executives and investor relations professionals of these companies, such price movements can be gut-wrenching.

In their quest for a solution to stock price volatility, some management teams monitor stock price movements on a daily basis and try to find explanations for this movement. This short-term focus is often non-productive and can even be distracting. It’s better for executives to concentrate on building long-term, sustainable shareholder value by providing the Street with identifiable milestones and successfully achieving those milestones.

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