My BofI decision and why

As has been noted, there is no universal “right” or “wrong” buy/sell/hold decision on BOFI. Each of us has individual-specific circumstances which ought to dominate that decision. Here is what I did, and why.

There was a post on BOFI board early Thursday morning about the Friendly Bear SA blurb. I did a quick read and checked the pre-market action. I sold a bit Thursday premarket and about half the remaining at the open. I sold all the rest Friday at the opening. Why? Several factors.

For one, it has become my nature to at least consider selling on “bad news”. I factor in my history with the company and the smell of the market’s reaction. With Chipotle, I waited for days while reading posts and news feeds and making back-of-the-envelope calc’s. I sold about halfway down to the bottom. With BOFI, I just had an overwhelming sense that the market was going make a massive dumping of shares. Part of this was the pending expiration of April options. In part it was the sensationalism of the piece. Part was the fact that the share price was up 30% in two months and there would be profit taking.

Some of that profit taking was mine. I first purchased BOFI in March, 2013. I bought at least monthly until July, 2014 and a couple of more—the last in April 2015. There were a lot of three-baggers and the entire holding was way more than a double. I bailed out August 28, 2015 still up 89%. I kept 3 shares for tracking purposes. But I was not out for long.

You may remember the angst here on the board. Over the next two months I rebuilt my position, only to capitulate November 4th, giving up 35% of my original gains. I was through, except for 200 remaining shares. For two months I abstained. But, as the market sold off in January I moved money from relatively stable stocks and added to the more volatile. Including BOFI. By this Wednesday’s up day these buys were about $23-- up an average of 25% and BOFI was my third largest holding. So, I locked in the gains at $21.12, $22.03, and $19.10.

What is next? Well, with Chipotle I sold with the intent to repurchase at a lower price. This was in a “real money” portfolio and I was able to later match the portfolio shares with less money. There was lengthy and contentious board discussion on timing the market and buy and hold—as you can imagine. Almost name calling. But selling seemed like an obvious thing to do. Sell higher, buy lower.

With BOFI, the jury is out. I am quite willing to buy back into BOFI. However, my circumstance was this: months ago I posted here that the best buy of these growth companies was Sketchers. It had good upside potential and the p/e had come back to safer levels. It was my best buy, but my portfolio did not reflect my opinion. So I moved enough of the BOFI money to SKX to match my top holdings: SWKS and INFN. Each of the three is now 11% of my portfolio. My BELIEF is that BOFI, the business, will do just fine. The pros and cons have been very well covered on this board. Perhaps we will see BOFI above $22 next week. Maybe it will trend lower. The lowest price I paid recently was $16.99. It was under $14 for a brief while in February. I would probably buy back in at $15 or $16, but not as large a position as before.

Bad news can provide good opportunity. Agility is the big equalizer that the individual small investor has. I could dump my entire portfolio into or out of BOFI in one session and not move the needle. That is a reason I will sell a company I like on the bad news. Out at $20, back in at $16, I own 25% more of the company than before. If I don’t get a good price, there are other companies that are worthy. Optionality. In any case, tomorrow I will compare BOFI against other investment candidates and be prepared whatever Monday brings.