Resetting the Signal at F5
F5 Networks (FFIV) focuses on application delivery networking products that help manage Internet traffic to servers and network devices.
[PostStockWidget stock_valuation="" pricetype="live" static_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'FFIV'" symbolprices="84" div_align="right"]
On March 14, 2013 we bought FFIV at less than $91.75. Since that time, the stock suffered a Valuation Reset and shares traded as low as $67.53. A Valuation Reset is when the market re-prices a stock into a new valuation range based on all of the available information.
Our rule of thumb is to exit at or near break-even whenever a Valuation Reset occurs and then provided that earnings are still growing, we look to re-enter at the new low valuation level.
Total Return for this trade reached -3.1%.
EXITING F5 NETWORKS DUE TO VALUATION RESET (FFIV, $88.50)
Occasionally, we make will make mistakes when we select Purple Chips and we will have to modify our plans to reflect the changing realities of the marketplace. In a case like this, we will be unemotional and we will look to preserve our investment capital so that we can be ready for the next low risk opportunity.
