Woolworths: How to decide when to leave a party

Chad Slater

Within investing, dealing with success isn’t the problem; understanding when your roadmap isn’t working out is the hard part. If you change your mind too early, you run the risk of shutting down good ideas on what we’d call “noise”.  The original thesis on Woolworths in 2015 was of over-earning with margins that were too high. This played out over the intervening period to the point where we’d acknowledge that the idea had become a “consensus short”. The idea was that there would be a second leg to the story with a competitive response from Wesfarmers taking pricing down to protect Coles’ newly grown market share gains.  When this Team Morphic member was younger, there was a saying “nothing good happens after 3 am”. So, has 3 am passed for now in the stock, and is it “time to leave the party?" (VIEW LINK)


Chad Slater

Chad co-founded Morphic Asset Management in 2012. As a stock picker Chad is also a generalist but has strong regional knowledge of Europe and the Americas. He has also been awarded the CFA Charter.

Expertise

woolworths short selling short covering ASX:WOW

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