Unfortunately, my thesis of improving growth prospects and higher end demand at SMTC Corporation (SMTX) appears to be incorrect and due to the high debt level at the firm I have decided to cut my losses and sell out of the position this morning.
As with any investor, I always hate to lose money on positions but my opinion is that one should constantly re-evaluate their positions as if they were looking at the company again for the very first time and to ask themselves would I buy this company today.
So, what went wrong? Simply, this is a small player in the semiconductor space and the company reported what appears to be a demand shortfall across multiple clients. In addition, the capitalization of the company has fallen to a level which for risk management purposes is too far below my stated minimums.
I plan to redeploy the cash in the next several days.