I’ve been a shareholder of XSR for almost 3 years and the fact that I’m overweight is beginning to concern me with the falling share price – the dividend is now approaching 6% and trading volume has been drying up. Is it time to take some profits and go underweight ? Looking forward to your reply.
Thanks for the assignment. Given that you have been invested going back to early 2012 you have succeeded in your original objective of picking a winner. What you might want to consider is a policy of adjusting your weighting on a regular basis and not simply on a retreat. The pullback that has been the tale of the tape for all of 2014 indicates that some hard earned profits have slipped back into the market instead of staying in your account. The company recently announced a regular quarterly dividend that yields 5.97% although it won’t quickly replace the dissipated capital. The concern with XSR is the fluid nature of broadcasting given new disruptive technologies that are constantly battering at the gates of former profit centres.
A scout of the charts will help inform your decision on how best to proceed.
The three-year chart indicates that 2014 has been a bust for investors in XSR. The end of the advance that started in early 2012 topped out at a 52-week high of $9.70 in December of 2013. The MACD and the RSI both generated sell signals at the time adding further evidence that it was time to book profits. By April of 2014 a death cross formed near $8.00 pointing to more selling pressure to follow. What has to be respected is the downtrend that has been in play since January. You have to have deep pockets to fight the trend.
The six-month chart illustrates the multiple trading opportunities that have presented themselves over the course of the decline. The MACD and the RSI signalled a buy in June as XRS bounced off of $7.00 on its way to $7.80 by August. By September the momentum indicators signalled a sell taking the shares back to $7.00. Currently there are no signs that we can expect a trend reversal.
The critical outcome is for XRS to hold $7.00. Below that there is support at $6.50. Usually when investors are sitting on profits and have suffered through a pullback they ask for input because they have wanted to sell for some time. Go with your gut. Throw to cash and then you can make another decision once the fog of lost profits has lifted.
Make it a profitable day and happy capitalism!