Trade Alert: Letting go of two longs

I’ve got a UNM Alumni Finance Committee meeting in Albuquerque again this afternoon, so I’m going to be headed out of here soon. I am going to be selling our long-held and winning position in Autodesk and our short-lived, losing position in Level 3.Here’s the analysis:

LVLT Let’s go ahead and remove this one because it’s looking like it’s not going to generate the kind of cash quickly enough to stave off another round of debt. Great investors and traders know that admitting your mistakes (early) and cutting your losses is key to long-term outperformance. I wanted to believe that LVLT had consolidated their Internet backbone business enough that they would start to see some big margin expansion. It hasn’t happened. They had a particularly bad quarter, especially in regions I thought they would do particularly well, namely the Middle East and South America.  The thesis hasn’t changed, ever more data being moved around,  but Level 3’s management just hasn’t executed.

ADSK  I’m selling Autodesk and sticking with DDD to be even more geared to the 3D printing.  That revolution is just getting underway and I want our portfolio to have as much pure play exposure as possible.  ADSK just has too many revenue streams that are built around the old ways. I do expect CAD (computer aided design) to grown at a multiple of the global economy, especially as the third world industrializes, but I 3D is so scalable and disruptive that it will grow even faster than Autodesk’s core business. Plus I don’t entirely understand why management just spent $60 milllion for a Facebook video sharing app and I don’t want to stick around to see if it’s going to a trend for their $1.8 billion in cash.