It should come as little surprise that most fund managers, who are generally a positive and optimistic bunch, find buying easier than selling.  Furthermore, sadly, it is human nature to buy at the top and sell at the bottom (despite everything we are taught).  So we have a number of disciplines to help.

Most importantly, we do not buy a stock until we have conducted detailed research and valuation analysis, the company has passed our "quality" checks and the Analyst has recommended the stock for our Approved List. 

A holding may be sold to make way for a new holding which is considered to offer better prospects.  Holdings may also be reduced if a “target price” is met.  Typically a stock may be bought back if there is a period of subsequent price weakness.  We constantly monitor extremes of outperformance, which may result in reducing positions, but should ensure taking profits at the “top”.  Depending on the mandate holdings will be reduced normally if they reach 3% of the total portfolio and automatically at 5%.

A sale may also be instigated if the Analyst changes their recommendation or if macro indicators give rise to concern for imminent sector weakness.  We have found over the past fifteen years that many of our core holdings have been “sold” as a result of take-overs.  In general, small companies give higher returns because they can grow faster.  Our focus is on well-managed, profitable, high quality companies in niche growth markets. It is little wonder that these are attractive take-over targets to private equity and trade buyers.