5 Stocks To Sell According to Motley Fool

1. Sea Limited (NYSE:SE)

Number of Hedge Fund Holders: 55

Sea Limited (NYSE:SE) is a communication services company based in Singapore. The company is engaged in digital entertainment, e-commerce, and digital financial service businesses.

Sachin Salgaonkar at BofA downgraded shares of Sea Limited (NYSE:SE) from Buy to Neutral on January 9.

Motley Fool Asset Management also eliminated its stake in the company during the third quarter.

A total of 55 funds were long Sea Limited (NYSE:SE) in the third quarter, with a total stake value of $2.4 billion.

Hayden Capital, an investment management firm, mentioned Sea Limited (NYSE:SE) in its third-quarter 2022 investor letter. Here’s what the firm said:

“Sea Limited (NYSE:SE) reported earnings last week, after which the share price rebounded +36% in a single day. The most obvious question that comes to mind, is why didn’t we sell more last year, when prices were still high? The truth is that we did sell a significant amount, but in hindsight obviously wish we were more aggressive with the sales.

For example, we owned the peak number of shares of Sea Ltd in Q1 2020, and steadily trimmed over the next two years. From Q1 2020 to Q1 2022, we trimmed ~39% of our shares over that period. However, the issue was that the investment continued to grow as a percentage of the overall portfolio, since the share price appreciated much faster than our sales (+620% from 1Q20 to 3Q21). This was a similar case for our other long-tenured positions as well.

So why didn’t we trim more aggressively and just hold cash? The answer is that at its core, I believe that holding cash is implicitly a market timing call. I certainly didn’t foresee a likely recession on the horizon so quickly after the turbulence of Covid already had on the economy. Even in late 2021, after it was clear interest rates would start rising, we were still operating under the assumption that rates would cause valuations to compress, but likely wouldn’t have an impact on the overall earnings trajectory. Given our expectations for strong earnings growth, we thought this could more than offset the valuation compression over time, and would still generate strong IRRs over a 3 – 5 year timeframe…” (Click here to see the full text)

See also 10 Best MLP Stocks To Buy Now and 12 Best Forever Stocks To Invest In.