Sell Alert: Xerox (XRX)
TRADE INSTRUCTIONS
Date: January 22, 2018
Name: Xerox Corp.
Symbol: XRX (NYSE)
Type: Close
Limit: Sell at market
TRADE RATIONALE
When I added XRX to the portfolio three months ago after it dropped on disappointing third-quarter results, I said: “this looks like a case of man versus machine and I think this time the machine has it wrong.” I felt program trading was at fault, overreacting to what in my opinion was a fairly decent overall result.
Until last week, it looked like the machine was going to win. However, now that the company appears to be in play we show a modest profit in this position instead of a slight loss. With only one week remaining in our extended holding period, I’m going to declare this match a draw and take my 40% annualized gain.
Stock Talk
Janis Bell
At 40% ag you’re clearly getting in at a better price than the rest of us, as I’m at 6.26% annualized to 25% — I got in at $30.58, still below your $31 recommendation, so I’d like your thoughts on waiting a bit more as the stock hasn’t recovered to its pre-crash high of >$34.
In other words, I’m not clear from your explanation why we’re not going another week with Q4 earnings expected Jan 31?
Jim Pearce
I opened the position in XRX on 10/27/2017 at a price of $30.45 and closed it yesterday morning at $33.00 (your buy and sell prices may be different from mine depending on what time of the day your orders were executed). That works out to a static gain of 8.37%, or 40% annualized.
With only one week left in the target holding period for Xerox, I feel it is safer to take the certain gain now rather than risk next week’s quarterly report pushing the stock down. I doubt that Carl Icahn would be publicly calling for the CEO of Xerox to resign the week before that report to be released if the numbers were going to be better than expected. I could be wrong about that, but I don’t see the point in taking that risk.
Of course, you are free to do as you wish.
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Mark M
Thank you on this trade Jim. I ended up with a realized gain of 8.8%. I income averaged down a little after your original alert and added to my position on the dips.
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