Selling
How I decide when I’m done
This post is part of my How I Run My Portfolio series—where I break down how I actually manage my capital. You can find the full series here.
If you are interested in this type of content, consider subscribing.
Introduction
We are constantly inundated with buy opportunities, but what about when to sell? I think one of the lessons that took me the longest to learn, at least for my style of investing, was when to sell. And I still have a long way to go.
A younger version of myself would mechanically sell a position and “rebalance” after a position went up 50-100%. Then I would take the capital and mindlessly buy more of a position that is down 30-50%. This was not a recipe for outperformance.
You’re going to be wrong a lot. The goal isn’t to avoid that—it’s to make sure your winners are larger than your losers. That’s where selling decisions start to matter.
Selling looks simple on the surface. In practice, it’s one of the harder parts of investing to get right. Selling isn’t one decision—it’s multiple different decisions that look the same.
When To Sell
I touched on this in my position sizing post, but this is where things get more nuanced. Selling isn’t one decision. It’s a set of different situations that all lead to the same action.
The mistake I made early on was treating every sell the same way. In reality, the reason you’re selling matters just as much as the decision itself.
Sometimes the thesis breaks.
Sometimes nothing is wrong—but something better shows up.
Sometimes the position just gets too big.
Those are very different situations, and they should be treated differently. This is where the decision-making side of running a portfolio really shows up.
Take Out
Takeouts are the cleanest situations to me. At that point, the decision isn’t really about the business anymore—it’s about capital and priorities.
Do I wait for the final 3–5% and tie up capital, or redeploy it elsewhere? It’s situational, and I’ve done both.
Over the years, I’ve had a few takeouts. Some of them were pretty bittersweet. OneSoft Solutions, RediShred, Quipt Home Medical, and Macro Enterprises are some more recent examples.
Thesis Break
This is one of the more obvious decisions for me.
I’m not talking about a delay or noise—this is when something fundamental changes and the original bet no longer holds. When that happens, I don’t need certainty. I just need enough evidence that the path has changed.
One example for me was ACCS (now ACCESS Newswire) when they acquired Newswire.com. The deal looked reasonable on the surface, but it changed the bet enough that I stepped aside to see how things would play out.
I’m long ACCS again today, but this is a different bet despite being the same stock.
I’ve had more than a few companies I’ve followed closely do something that breaks the original reason I was interested in them. When that happens, they get removed from my watchlist immediately.
Misassessment
This is different from a thesis break. Nothing necessarily changes externally, I just realize I was wrong. This tends to happen as you discover more about the business and people as I own something. I misunderstood the business, overestimated the upside, or missed something important.
When that happens, the question isn’t whether it might still work—it’s whether it’s still worth having capital tied up in it.
MATR is a recent example for me. I became underwhelmed with the business and realized how much the outcome depended on the balance sheet. My view of the opportunity changed enough that I reduced and eventually exited.
I went back to my notes at the time and realized how much my view had changed:
“I am underwhelmed with the business so far… I believe I have overestimated what the potential was. The story is still interesting, but everything feels pushed out from here.”
A Delay
Not everything breaks—sometimes it just takes longer.
Delays are part of doing business. But if the timeline stretches far enough, it changes the attractiveness of the position. To me, this is different than a misassessment—the delay is something I didn’t foresee or wouldn’t have reasonably expected to foresee.
The thesis may still be intact, but the return profile isn’t. It may make sense to keep some exposure, or it might be something where I sell. That’s where I’ll often reduce or partially exit.
One example for me was OneSoft Solutions. I felt like I had a good handle on the opportunity, but pricing work and slower customer uptake pushed the timeline out by a couple of years. That was enough for me to take some money off the table.
Better Opportunity
Sometimes the sell has nothing to do with the company. Capital is limited, and new opportunities show up.
There are times when I come across something I have higher conviction in, and the decision becomes less about whether the current position is “good” and more about whether it’s the best use of capital. In those situations, I’ll reallocate.
A good example for me was Cipher Pharmaceuticals in 2021. I sold a few lower-conviction positions and rolled that capital into CPH.
The caveat is that if you rotate capital out of something that has been working into something that hasn’t, you need to be prepared to be patient—and potentially look wrong for a while.
Too Concentrated
Sometimes the position works—and becomes too large. At that point, the decision is driven by the portfolio, not the company.
I mentioned this in my position sizing post, but this is one of the situations where selling becomes more mechanical. I’m not necessarily changing my view on the business, I’m managing risk.
XPEL and CPH are my clearest examples. I’ve also had positions inside baskets grow too large relative to the rest. In those cases, I trim.
Valuation
I don’t like selling purely on valuation. But there are times when expectations get far ahead of reality, and taking some money off the table makes sense.
Sangoma during the SaaS run is a good example. I convinced myself the downside was limited because it was “cheaper than peers.” That didn’t matter. Reality slapped me in the face.
XPEL running from under $10 in 2020 to over $90 in 2021 was another case. Great company, but at some point the growth gets fully priced in.
Blow out a small position
Sometimes I just clear out the small positions. They’re rounding errors. Whether they’re up or down, they don’t have a meaningful impact on the portfolio.
At that point, it’s less about the individual position and more about simplifying the portfolio and freeing up attention.
How I Actually Sell
I’ve shifted my mindset from optimizing for price to focusing on making the right decision.
In most cases, I’m reacting to new information as it comes in. I’ll reduce exposure, reassess, and then decide whether to keep going or stop. It’s usually not one clean decision—it’s a series of smaller ones.
There are exceptions.
If the thesis breaks cleanly and there is liquidity, I’m more likely to exit quickly. At that point, I just want to move on psychologically. I don’t care if the stock performs well after I sell—I’m no longer comfortable holding the position.
If it’s more of a portfolio decision—like concentration or capital reallocation—I’ll usually trim in stages. I’m not trying to get the perfect price, just to get to a position size that makes sense.
On the other end, if it’s a valuation-driven trim, I’ll be more patient and sell into strength. Selling into strength is hard. It always feels like if I waited another week, the shares would be up another 20%. That feeling doesn’t really go away—you just get more comfortable acting despite it.
There’s also a practical side to this. In microcaps, liquidity matters. You can’t always get out in one trade without moving the price, so part of this is simply working within the reality of the market.
Like most things, it depends on the situation. The reason I’m selling usually dictates how I sell.
One thing I didn’t mention that also guides my decisions is cash levels—but that’s its own post.
Closing
Selling doesn’t get talked about as much as buying. It’s harder to market, harder to measure, and harder to explain—but it has a meaningful impact on long-term results.
For me, selling isn’t one rule—it’s a set of decisions based on how the original bet has changed and whether the position is still worth my capital.
How do you think about selling?
Thanks for reading.
Dean
If you found this useful, you can follow the full series here.
