Edgewood Management LLC

Sell Discipline

Edgewood’s philosophy is to act as a long-term and deliberate investor. Therefore, Edgewood's portfolio typically has moderate turnover and long holding periods.

We adhere to a strict sell discipline in which primary coverage of a company is reassigned from the original Portfolio Manager to another member of the Investment Committee when one of the following events occurs:

  • A stock is down relative to industry peers
  • Two consecutive quarters of earnings disappointments
  • A major change in the company or industry fundamentals

Once one of these events occurs, coverage is reassigned and the stock is reassessed. The original analyst stays on the committee as an information resource but does not have a vote on the outcome.

The committee in such cases discusses the new analyst’s findings and decides whether we should take advantage of the decline by instituting one of three actions:

  • Buy more,
  • Sell what we have, or
  • Just hold on to what we have.

Evaluate

If one or more of the following:

  • Stock down relative to industry peers
  • 2 consecutive quarters of earning disappointment
  • Major change in Company or Industry Fundamentals

Reassign & Reassess

Then:

  • Buy,
  • Sell or
  • Hold