SGP - a retrospective on my sell

Thursday, May 22 2014 by
7

I often call SuperGroup (LON:SGP) the worst sell I ever made. I had sold on 16 July 2013 at 942p, only to watch the share price climb much higher. A few days ago, I got an alert that the shares were down 20% from their 52w high. So I thought it would be interesting to revisit the shares.

My reasons for selling at the time was that the price versus 50dma rose above 25%, and I figured that the share price was over-extended. Looking back at the charts, I see that the RSI had made it into overbought territory slightly before that. I wasn’t aware of the RSI at the time, though.

Imagine my dismay as the share price seemed to climb ever-upwards. I was anticipating a pullback within a few weeks of my sale, which never happened. The shares did trade sideways from mid-August to December. I’m not surprised, given the very strong gains that it had made previously. A consolidation phase was to be expected.

In December, the shares had consolidated enough, and its upward trajectory resumed. The shares reached a high of 1749p in April, and I was obviously disappointed that I had sold out far too soon.

Then a bad thing happened: momentum shares reached a peak, and the bubble popped. The shares now trade at 977p as at the time of writing. IF you had perfect timing, you would have made a considerable amount of money out of SGP. IF you were a bit slow on the trigger, then you would have seen much of those gains evaporate.

As it happens, over the period during which I sold, the share price is up around 3.2%, almost exactly the same as the Footsie, and a shade behind the FTSE 250.

So, putting that in perspective, I don’t think my sell was bad at all. The gains you make or don’t make are often quite sensitive to timing. I am also glad, in retrospect, that I didn’t chase momentum as the stock galloped away from me, tempting though it was. Momentum is fine, provided you can call the top, which is rarely a definite. I think it does illustrate the point that if you think the shares are overextended, you are probably as well to back that judgment, rather than pine for what might have been.

So, my current thinking…

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Superdry PLC, formerly SuperGroup PLC, designs, produces and sells clothing and accessories under the Superdry brand in approximately 670 points of sale across the world, as well as online. The Company offers a range of products for men and women. The Company operates through three segments: Retail, Wholesale and Central costs. The Retail segment's principal activities consist of the operation of the United Kingdom, Republic of Ireland, European and the United States stores, concessions and all Internet sites. The Retail segment is involved in the sale to individual consumers of its brand and third party clothing, footwear and accessories. The Wholesale segment's principal activities consist of the ownership of brands, wholesale distribution of its brand products (clothing, footwear and accessories) across the world and trade sales. It offers a range of products, including t-shirts, polo shirts, hoods and sweats, joggers, tops, dresses, jackets, shirts, footwear, bags and accessories. more »

LSE Price
409.98p
Change
-1.5%
Mkt Cap (£m)
341.4
P/E (fwd)
8.7
Yield (fwd)
5.5



  Is LON:SDRY fundamentally strong or weak? Find out More »


2 Comments on this Article show/hide all

pkumar8354 25th May '14 1 of 2

SuperGroup is at trend changing phase, its relative strength index crossed RSI 30 mark. Moving average cross-over has already happened and it has just crossed bolliger band in graph http://www.stockchartfree.com/historic/SGP.L/4-11-2013/23-05-2014/ . Looks like SGP is entering into positive trend

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mpat89 25th May '14 2 of 2

Technically speaking, now that 1000p has been tested as support and held, so long as price can keep closing above that level then we should be looking to the upside. If not, the 660p - 770p range is likely to be a very good long term entry point, IMO that would be the kind of entry where you can hold for years without showing a paper loss.

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About Mark Carter

Mark Carter

I am a private investor living in Scotland. I am a computer programmer by trade.

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