Taking Profits: Lessons From Holding Duluth Stock

Aug. 24, 2018 10:49 PM ETDuluth Holdings Inc. (DLTH)12 Comments

Summary

  • I first wrote about Duluth Holdings about 2.5 years ago, not long after its IPO.
  • It is probably the only true growth stock I've purchased this past decade, and at the time it was a true Peter Lynch-style pick.
  • I wrote two articles about Duluth, both 'buy' articles. The first article I considered Duluth a good GARP investment, and in the second, a pure growth investment.
  • This article examines what I learned from both style investments.
  • Today I'm taking profits in Duluth, even though the long-term growth story is still intact because I expect future volatility to present a lower stock price again.

Source: Duluth Trading Company

Introduction

Nearly three years ago I wrote my first article for Seeking Alpha. During the first six months of writing on the platform, I was really feeling my way around and trying to find my niche. I wrote on a wide variety of topics and stocks, including short articles and macro calls. It wasn't until about February of 2016 that I decided to focus on long-only cyclical investing, which is pretty much my exclusive focus now. Duluth Holdings (NASDAQ:DLTH) was one of the last stocks I wrote about that didn't include a cyclical angle with the investment thesis. It was also the last of my early ideas that I still personally held as of August 2018. All of my previous long ideas on SA had been realized. I recently sold my Duluth shares for a price of $29.15 per share. And in this article, I will explain why I made the two purchases of Duluth that I did back in 2016, what I learned from holding Duluth stock the past couple years, and why I decided to sell my shares this week.

Why I bought Duluth

I first discovered Duluth Trading Company in true Peter Lynch-style. My wife, who works as a creative director in advertising, told me how much she the loved Duluth's creative marketing campaigns, and suggested I research the stock if it was publicly traded. At the time, I had never heard of the company, and, nine out of ten times, when someone brings me a stock idea it usually doesn't end up being an investment for me. Most of the time the stocks people suggest are overpriced, and the rest of the time they are highly speculative growth stocks. Rarely, do people bring me good values. But, with Peter Lynch fresh in my mind, I noted my wife's comment and checked out Duluth Holdings. To my surprise, the stock had had a recent IPO

ChartDLTH Total Return Price data by YCharts

ChartDLTH Total Return Price data by YCharts

ChartDLTH Total Return Price data by YCharts

This article was written by

Cory Cramer profile picture
20.21K Followers
One-of-kind research using historical cycles to identify tops and bottoms

My analysis focuses on the cyclical nature of individual companies and of markets in general. I've developed a unique approach to estimating the fair value of cyclical stocks, and that approach allows me to more accurately buy near the bottom of the cycle.

My academic background is in political science and I hold a Bachelor's Degree and a Master's Degree in political theory from Iowa State University. I was awarded a Graduate Research Excellence Award in 2015 for my research on conservatism.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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