We’re Exiting This Position. Here’s Why.
Back into the Bullpen it goes. Here are the conditions that could bring this name back to the Portfolio.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
| BLDR | Sell | 900 | 64.92 | 0 | 0.0 |
After you receive this alert, the Pro Portfolio will close out its position in Builders FirstSource (BLDR) selling all 900 shares at or near $65 for a loss of ~8.3%.
With bond yields and oil prices moving higher yet again this morning, we are exiting our position in BLDR to prevent a modest loss from becoming a larger one. This move will also up our cash position, giving us some additional room to maneuver should the tensions gripping the market bring further pressure on it.
In addition to oil prices and Treasury yields rising today, ISM’s August Manufacturing PMI report showed the Price sub-index was unchanged at 71.1 compared to July. This adds to the view that inflation is at best sticky, but runs the risk of escalating once again based on the renewed climb in oil and related prices. In our view, this increases the odds of a Fed rate hike later this month. That is giving us a reason to remove BLDR from the Portfolio at this time.
As we do this, we will place Builders FirstSource back in the Bullpen for a time when inflation pressures subside on a sustained basis, and the housing market, especially single-family homes, bottoms out. Signs we’ll be monitoring for that will be a flattening in homebuilder backlog levels, which have continued to decline of late, falling mortgage rates and steadying of new purchase mortgage originations, and homebuilders winding down the use of incentives to move units.
More Pro Portfolio:
- We’re Accumulating More Shares of This Oversold Holding
- We’re Tracking 23 New Signals Across Our Investing Themes
- August Monthly Roundup: Maintaining Our Lead Through the Ups and Downs
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long BLDR.
