Tuesday 19 March 2013

Portfolio Sale: Sainsbury (LSE:SBRY)

Don't get me wrong, I think Sainsbury's is great and the latest trading statement bears this out. But I'm not built like Warren Buffett (who likes to buy good companies cheaply and hold them for ever) and I want to 'bank' my gains.

So, like the logo says, I think I'll try something new - but maybe not today.

I try to control my unfortunate natural urge to 'take a profit' until the capital gain has reached an amount equivalent to 5 times current income (unless the yield is still good, when I will try to sit on my hands a bit longer).

My rationale (such as it is) is that the share has done its job of generating income and the capital can be redeployed. Of course, I miss the really big gains - but then again, in my experience the high-yield dividend payers don't often 'shoot through the roof'. More often than not, the short term share price rise evaporates.

I bought Sainsbury only in January 2012; I reviewed it - singing its praises - in October 2012 when my sell indicator started flashing. Since then the price slid down again but it has recovered sharply in recent weeks and hit its yearly high today. The sale has produced a 30% capital gain plus a dividend or two.

One additional reason for selling is that I have become increasingly nervous about the UK supermarket sector. It's very competitive and with the big, wounded beast of Tesco flailing around, someone could get hurt. At the moment the potential victim looks like Morrisons - but what do I know?

So I have added to my cash pile - presenting me with another, more pleasant but always challenging problem: what buy next? With the overall portfolio total returns approaching 30% for the financial year, the pressure is on to maintain a return anywhere near that!

[Sale price: £3.745]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

1 comment:

  1. Wow, I've been wondering about picking up a few of these to de-risk my portfolio! :)

    That's what makes a market, I guess...