Player/Coach Debate: A Sneak Peak Behind the Scenes at Hedgeye

Here’s a peek behind the scenes at Hedgeye as we evaluated whether or not to remove Hologic (HOLX) from our Investing Ideas product this week. It was a debate between the coach (Keith McCullough) and player (Tom Tobin). Tobin is our Healthcare sector head and he authored this note.

Player/Coach Debate: A Sneak Peak Behind the Scenes at Hedgeye - research

[At a fund] I would be telling my portfolio manager to take down the position, but not eliminate it. Embracing the uncertainty of how the data leans (high valuation, +performance, possible negative surprise on revenue) is the key here.

 

Player: I am sitting on some good performance. I like the long term, but I see some short term risk. Data point 1, data point 2, etc….

 

Coach: Let’s book it. What I see from my seat doesn’t look good for the name.  I hate this market and want to take down long exposure.

 

Player:  But it could double from here! Be patient, you're overreacting.  I’m just covering myself by sounding an alarm.  I may be misreading how the street will react. And there’s always a chance I’m being way too worried about what other people think.

 

Coach: Relax. We’ll buy it back.

 

Player: That never happens.  If I am wrong, the stock will be up and you’ll wait for a pullback that never comes. All of my research will get wasted.  I put so much into this it will be heartbreaking to see us not participate.

 

Coach:  Okay.  Let’s sell half, more if it rallies into the number, less if it sells off.  You good with that?

 

Player: That sounds good. If they puke the quarter we can double down.  I’ll keep you posted as I update key data.