Coronavirus picks: Part 2; I sold Waste Management
[Disclosures: I am not longer a financial adviser. And I'm not giving investment advice I'm just explaining why I've made the trades I've made recently.]
Waste Management is the first stock I've sold in two years. (Other than involuntary liquidations as part of acquisitions, or the handling of fractional shares in a corporate action. I've also reduced my position in an ETF at least once to free up capital to invest in an individual stock.)
I sold them on April 8th, 2020.
I did this because they are in a really bad business throughout the lockdown.
WM is a garbage disposal company. They basically have two types of clients: residential clients who pay a set monthly amount to have all their trash picked up weekly or twice weekly, and commercial clients who rent a dumpster and pay to have it emptied each time it is emptied.
With the Covid 19 lockdown, residential customers are generating more garbage that costs WM more to dispose of without paying anything more for this service. At the same time, businesses are generating less garbage and no longer buying WM's services as often pay-per-use. So WM has increased costs in their residential business with no corresponding increase in revenue, and at the same time, they have decreased revenue with correspondingly decreased profits from their commercial business.
But at least they benefit from low oil prices, right? Right? Wrong.
WM has also invested heavily in getting off of oil. And that's a competitive disadvantage at the moment.
This is literally the only individual stock I've sold in two years. And the only individual stock that I went from wanting to hold to wanting to sell in response to this epidemic.
And it's completely flat since I sold it and the two stocks I reallocated that money into have done well in the time being. I'll write more about them tomorrow.
Waste Management is the first stock I've sold in two years. (Other than involuntary liquidations as part of acquisitions, or the handling of fractional shares in a corporate action. I've also reduced my position in an ETF at least once to free up capital to invest in an individual stock.)
I sold them on April 8th, 2020.
I did this because they are in a really bad business throughout the lockdown.
WM is a garbage disposal company. They basically have two types of clients: residential clients who pay a set monthly amount to have all their trash picked up weekly or twice weekly, and commercial clients who rent a dumpster and pay to have it emptied each time it is emptied.
With the Covid 19 lockdown, residential customers are generating more garbage that costs WM more to dispose of without paying anything more for this service. At the same time, businesses are generating less garbage and no longer buying WM's services as often pay-per-use. So WM has increased costs in their residential business with no corresponding increase in revenue, and at the same time, they have decreased revenue with correspondingly decreased profits from their commercial business.
But at least they benefit from low oil prices, right? Right? Wrong.
WM has also invested heavily in getting off of oil. And that's a competitive disadvantage at the moment.
This is literally the only individual stock I've sold in two years. And the only individual stock that I went from wanting to hold to wanting to sell in response to this epidemic.
And it's completely flat since I sold it and the two stocks I reallocated that money into have done well in the time being. I'll write more about them tomorrow.
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