This Skin is Looking Worn-out, Time to Shed
Nu Skin Inc. is a global direct selling company with operations in 53 markets worldwide. The Company develops and distributes anti-aging personal care products and nutritional supplements through 950,000 distributors worldwide under the Nu Skin and Pharmanex brand names.
[PostStockWidget stock_valuation="" pricetype="live" manual_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'NUS'" symbolprices="50" div_align="right"]
Exit NUS at the market. At first glance, the reported earnings did not appear to break the trend. However, when one digs deeper it becomes obvious that our plan is not working out. When we published our Low Valuation Alert on NUS in June, the Bloomberg consensus earnings estimates for 2015 and 2016 were $6.94 and $8.36. Following the latest earnings report, the estimates have now been slashed to $4.80 and $5.43 respectively. The bad news is not over.
This trade has reminded us of a lesson in position size and discipline. While the original trade held promise, our small high-risk position size of 2.5% has limited the damage. By pulling the trigger on the trade and exiting as fundamentals have deteriorated, we have a chance to make a better trade during the second half of this year.
New Purple Chips Valuation Range: Low NIL, High $65.00
EXITING NUSKIN AT $USD 49.05 (NUS-US, $49.20) HALF POSITION
This trade delivered a TOTAL RETURN: -33.3%
