Simon Bonouvrie

At Cadence, we have a process of scaling into and out of stock positions. When a price trend in a stock turns and moves materially off a previous high we will start selling the position. This process of scaling out of the position continues as the stock trends lower. We also institute a hard stop discipline when the stock falls a material amount from our average cost price. So generally speaking, we sell stock as the price moves lower with a view to possibly exiting the position after a significant price drop. We hold the view that stocks like to trend, therefore, we don’t add to a falling position. If the fundamentals of a stock have not deteriorated, or in fact improved, and the stock price starts to recover after a significant fall then we may look to scale back into a position or initiate a new position. We need to see a technical price chart-bottoming pattern before considering buying the stock. We will only invest once we think the price trend has reversed and is heading back up.


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