Tax-Loss Selling: 5 Stocks We'd Be Glad to Sell Right Now
At that time, Transocean had an impressive $27.3 billion backlog of business, and had 82 rigs in operation with big plans for growth. Now, the backlog has dropped by 38%, to $16.8 billion, and the company continues to work through the backlog quicker than it is adding to it. There are now 62 rigs in operation, and the challenging energy markets have resulted in a number of rigs either idled or scrapped.
Further, I bought Transocean partially for its juicy $3.00/share dividend, which Carl Icahn had just successfully pushed the board into approving before oil started to decline. During the past year or so, the company's dividend has been slashed, and is now suspended.
Having said all of that, my position in Transocean is relatively small, so I haven't completely made up my mind about whether to sell or hold. My point is that, when the reasons you bought a stock don't apply any longer, it's completely understandable to contemplate getting out.
: Shares of video game retailer GameStop are down 36% since late this summer, far worse than recent sales and earnings results would seem to dictate:
Why don't I view this as a buying opportunity? After all, Fellow Fool Rick Munarriz recently pointed out that there is a good reason to own shares, because the business is solidly profitable and relatively low cost to operate. And even if that business does steadily decline, it's not dead just yet.
But I'm concerned that GameStop's business model is going to start running out of steam sooner than later. Most importantly, I'm not willing to count on the company reinventing itself, which Rick alludes to in his article, as a viable investing thesis. Sure, the nearly 5% dividend yield is nice; but when things get tough, which they undoubtedly will within a few years, that dividend will be the first thing to go.
Digital music downloads obliterated the record store, and there's nothing to stop the same thing from happening with video games now. Eventually, that means GameStop's used game business will cease to be the cash cow it is today.
Sure, it could be a slow decline, and management may have enough time to find a new business to build around. But I'm not willing to bet on it happening slowly and management reinventing the company, especially as a best-case scenario. GameStop: I see the future. And you're not there.
Dan Caplinger : It's not often that you find a takeover candidate that's also a good choice for a tax-loss sale, but Keurig Green Mountain finds itself in that unusual position. The maker of household hot- and cold-beverage machines recently got a $13.9 billion buyout bid from European consumer-goods conglomerate JAB Holding, boosting its share by more than 70% in a single day.
The problem for many shareholders is that, prior to that buyout bid, Keurig Green Mountain had lost as much as two-thirds of its value just since the beginning of 2015. Those who bought the stock at its peak in late 2014 are still sitting on losses of more than 40%, and with a cash buyout price of $92 per share, the question isn't whether those unfortunate buy-high investors will take a loss, but when .
With the stock trading just a few dollars shy of the buyout price, there's little upside to holding onto Keurig shares. Yet those who have lost money on Keurig can easily sell their shares on the open market, and take advantage of their capital loss during the 2015 tax year, claiming it on their tax returns early next year. By contrast, if you wait until the deal's expected closing date, you won't be able to claim a loss until you file your 2016 tax return. For many, getting the tax loss earlier is worth accept a bit less than the full buyout price.
Jordan Wathen :Fifth Street Finance has had a rough year, plunging more than 23% year to date. The company has come under the fire of an activist investor and securities lawyers, making it the subject of class action lawsuits. Though its 11.7% dividend yield may be alluring, it's time to cut ties with the business development company.
On a recent conference call, insiders noted that the company's earnings would be depressed due to higher legal fees. Ordinarily, these fees are a burden to a fund's manager, not the fund itself. If Fifth Street decides to pay fees out of the Fifth Street Finance coffers, protracted activist campaigns and class action lawsuits could slowly drain shareholder wealth. It's my opinion that the best course of action is to simply realize the loss, walk away, and avoid legal risks that are almost impossible to quantify.
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The article Tax-Loss Selling: 5 Stocks We'd Be Glad to Sell Right Now originally appeared on Fool.com.
Dan Caplinger has no position in any stocks mentioned. Jason Hall has no position in any stocks mentioned. Jordan Wathen has no position in any stocks mentioned. Matthew Frankel owns shares of Transocean. Selena Maranjian owns shares of Procter & Gamble. The Motley Fool recommends Procter & Gamble and Ulta Salon, Cosmetics & Fragrance. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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