Investment Appreciates Faster Than Expected

I have a pretty good problem. My thesis for one of the stocks I pitched is playing out much faster than I anticipated and the stock has appreciated and reached my price target.I am not sure given the speed of which the thesis played out and constant upward revision of management guidance if I should sell as I intended at this time or revise my own assumptions higher. How do you know how to proceed in this situation?

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From flaco

1) The point I was trying to get across is that new legs to your thesis should be measurable as upside in your models (or at least attempt to be). I've found that's the best way to be disciplined about measuring incremental upside, especially after a position has "worked". The exception for me is if you have a good business with a great management team that can create its own optionality, or can pivot in a narrative-changing way that isn't immediately measurable or changes the business model. Meaning I don't know what they might do, but I have confidence they'll do something right (strategically or capital allocation). I'm willing to take a bet on management in those instances if they're not being awarded a proper premium on valuation -- but management will never be the only leg of a thesis for me. Some examples are big pivots (e.g. NFLX) or increasing TAM w/ new products and a captive audience (e.g. AAPL) that the investor base probably didn't fully understand before the fact.

 

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