Wednesday I sold my full position in GeoEye, Inc. (NASDAQ: GEOY), a provider of space-based and aerial imagery and geospatial information, at $20.75 per share.
The total amount in my portfolio was was for a 3/4 position out of a full position, accounting for about 25% of my portfolio.
Those that follow me on Twitter received this update as I made the transaction.
As I recently wrote, GeoEye threw investors a bombshell on their latest quarterly earnings and conference call when management acknowledged that their latest satellite, and the main basis for my investment thesis in GeoEye, GeoEye-1, was experiencing some mechanical/technical difficulties in one of its modes, and it was very possible that while that mode didn’t account for a large portion of revenue for the company, that the satellite might never be able to recover.
This sent the stock down 15% that day, and it has yet to recover.
In my earnings post, I reiterated how this changed things for GeoEye and our investment in the company, and how I was placing GeoEye on a cautious outlook and “Hold” stance.
Since that time the stock has continued to crater.Wednesday it sold off again on heavy volume, and broke through key support and technical levels that I found too risky to ignore any longer.
Those that have been reading my blog and following me for quite some time know that GeoEye has been a stock that I have recommended for over a year now, and while I sold Wednesday at $20.75, I still eked out a small profit on the company despite its recent turmoil.
I am loathe to turn a small gain into a big loss, and am going to take my medicine like a man and measure GeoEye’s risk/reward more objectively from afar now.
What Will Change My Mind?
It’s quite possible that I will revisit my position and advocate buying shares of GeoEye again in the near future, but it all depends now on the company’s outlook for GeoEye-1, current market conditions, the stock’s relative strength and patterns which look very bearish now, and other factors.
I advocate you sell your entire GeoEye position right now and wait until further notice from the company as to whether or not GeoEye-1 is reparable, whether or not GeoEye can sustain their high level of revenue if in fact they cannot fix GeoEye-1, and watch the company’s stock price movement relative to the market and its trends that show institutional money quickly vacating the stock.
Accordingly, if you choose to remain invested in GeoEye, note that I am raising my risk rating to my highest level possible, a 10 because of all the risk factors now involved.
New to the GeoEye story?
- Read: my breakdown of GeoEye’s last quarterly conference call and earnings update.
- OR: read my latest buy recommendation for GeoEye.
- OR: listen to my EXCLUSIVE interview with GeoEye’s management team here.