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When strategy and return mean two different things...

I am once again faced with a decision on which I would be pleased to hear a few opinions from the community. It's about my most successful position $BMPS (-0,95 %) where I currently have a 315% profit and a div. yield-on-cost of just under 45%. An investment that has really worked out spectacularly so far. Now, of course, the position has become very large and the high dividend is also contrary to my actual strategy of focusing on share price growth. I have therefore considered reducing the position a little and taking around €700 out of €4200. On the other hand, I still think the company is a really good investment and think to myself that I can actually let it run purely to build up assets and you don't want to punish the portfolio stars and buy something that isn't going so well... how do you proceed when you get / would get into such a situation?

10 Commentaires

Sina@lawinvest

The fact that you're even thinking about it shows that you're not entirely satisfied. If in doubt: pull out, let profits run.

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DieEnte7@DieEnte7

@lawinvest I'm super happy, but at the same time I wonder whether an Italian regional bank that was on the verge of bankruptcy in 2020 must have the same share in my portfolio as Google 😅

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Sina@lawinvest

@DieEnte7 I don't necessarily mean with the share, but with the situation in general. And that's what I'm reading from the commentary now

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Chris@Multibagger

@DieEnte7 I don't know which broker you are with, but if he allows a trailing stop loss as an order, I would otherwise use it. Enter an SL for the number you want to sell and a TSL, which you can specify in € or %. This way you take further increases with you and your SL rises with it.
However, this small regional bank is currently aiming for a takeover and if it works out, it would become No. 3 in Italy.

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Kevin E.@KevinE

If I have shares, I buy for a maximum of €10k, but generally let profits run. However, if the share's profits rise so much that an individual share accounts for more than 5% of my portfolio, I would also sell part of it to reduce the risk.

In the past, it was always enough for me to only buy other stocks in my portfolio to keep the weighting within limits.

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DieEnte7@DieEnte7

@KevinE I have handled it similarly so far and the thought has already occurred to me, but the rise has been so furious that I probably wouldn't even have made up for it in 3 years purely through purchases if the share price had changed by 0% in that time.

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Chris@Multibagger

Unfortunately, I only recently discovered the share and have taken a small position for my medium-term portfolio. So I will keep it and gradually build up the position. Of course I can understand your thoughts. I can also answer them relatively simply. There would be exactly one reason for me to reduce or sell such a position. I would have to have identified a title where I believe the chapter will perform better in the future.

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DieEnte7@DieEnte7

@Multibagger I completely agree with you and I have to say that there is no title with a better development, I fully trust BMPS to continue to record decent gains.

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Chris@Multibagger

@DieEnte7 then keep them until your impression changes.

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GHF@GHF

Your problem is easy to understand. In principle, I would reduce positions that have become so large that they dominate the entire portfolio. However, you now have a phenomenal dividend yield on this position. That's why I wouldn't reduce the position now without necessity, you won't find such a cash cow again so quickly.
Why not set a stop loss or trailing stop loss on part of the position? This way you can keep your cash cow running, but at the same time have a hedge.
However, I am unsure about the planned takeover. This could well mean a weaker share price for a few months.

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