Friday, November 16, 2012

Recent Sell

This afternoon I decided to go on and sell out of my position in Pfizer (PFE).  I sold all shares at a price of $23.79 which netted a gain of $114.24 on the position.  The shares had a YOC of 4.71% which was nice and they were due for a dividend increase with their first payment of next year.  I'm still set to receive the next dividend payment in early December which will give me another $5.26 once the paid out.  My cost basis for the position was $426.78 for original cost and the adjusted cost basis counting reinvested dividends was $446.86.  The proceeds from the sale amounted to $561.11 after commissions.  My total return based off the initial purchase was 31.48% since September 2011.  My total profit/loss percentage for the position, based off the adjusted cost basis accounting for reinvested dividends, was 25.57%.

I'll be losing a good yielding company but I just wasn't comfortable with owning the shares for a few reasons.  One, the position was very tiny I originally purchased 23 shares last year because that was all the capital that I had available at the time.  Two, I purchased the shares as more of a potential "rebound" stock since this was before I started to focus on DGI.  And the big reason is that I'm worried about their drug pipeline.  In the pharmaceutical drug business you're constantly looking for the next blockbuster drug like Lipitor but it's very difficult to find.  Even when you do so much of your potential profits are eaten up by further research for the next blockbuster and it's tied up in testing and approval by the FDA.  Once the patent on the drugs expire the profit margin is compressed as you can see from Pfizer's results the last few years.  I was worried about the growth going forward and so I sold.

I still think Pfizer is a solid company but the position was too small for me to keep it open.  I'd much rather put that capital to work in companies that I've researched a lot more and feel they provide a good margin of safety with growth, especially dividend growth, going forward.  So chances are Pfizer will find a new blockbuster drug and get it approved soon and start making bank like crazy and rewarding shareholders with 20% dividend increases.

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