Let’s dig into the path of Republic Services (RSG), a holding in both the portfolio of our Best Ideas Newsletter and Dividend Growth Newsletter. The trash taker’s past several months have been quite volatile due to some negative newsflow, but the company has now fully recovered and is breaking out to a new 52-week high today!
Though we had plans to trim our position in both of our actively-managed portfolios following its weak performance in early November of last year, we didn’t move an inch as we awaited for a tactical exit. In fact, in our Dividend Growth portfolio (cost basis: $27.55 per share), we still hold a full position, and we’re now sitting on profits in our Best Ideas portfolio — even before considering the steady stream of growing dividends we received from the garbage hauler.
The key takeaway is that when we add a company to our actively-managed portfolios, we have conviction in our idea. When others run for the exit when newsflow turns negative, we don’t overreact as Mr. Market often does (at the expense of the retail investor). And in this particular example, even though we’re still planning to trim our position in both of our actively-managed portfolios, patience and letting the story evolve (from Hurricane Sandy to REIT-conversion speculation) has turned a potential loss into a big winner.
