It is a very bittersweet day - I have officially closed out my position in ASTE - exiting with approximately a 45% gain over the course of 10 weeks. It is always difficult to part with your winners - there is always the fear that they will go higher and that you will miss the boat on it. However, you have to keep your strategy in check. When I originally purchased ASTE back in September, the vision was a rebound into the mid 30s range after getting whacked down 50%+ following an excellent earnings report that did not meet Wall Street expectations. My September 5, 2006 blog highlighting ASTE at $24.71 discusses this. So, it's time to move on.
My reasoning is as follows. First, it hit my short-term target of the mid $30s. Also, although prospects for the company remain strong and ASTE could very well continue its upward trend, it appears that the current trend is running out of gas. $35+ has been challenged a couple of times, but on relatively light volume - at least compared to what brought it up to $30+.
Additionally, the downside seems to be more of a risk, especially now that the market is expecting ASTE to overperform in the 4th Quarter 2006 as that information was disclosed in the conference call regarding 3Q 2006 numbers. Basically, the bulk of the potential upside to a strong 4th Q may already be priced in.
So, now with ASTE gone, I need to find another position to fill up my day and replace ASTE in the portfolio. I will also be evaluating how I would like to use the principal and proceeds from this trade to strengthen my positions in NBG, INFT, ASHG, and possibly SEB. NBG looks very attractive right now after it reported strong earnings and is down 3.5% on the news - buy on rumors, sell on news as they say.
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