Tom Gayner: Don’t Sell When You Reach Your Target Price

Johnny HopkinsTom GaynerLeave a Comment

In his latest interview on the Good Investing Talks Podcast, Tom Gayner discusses a number of topics including his capital allocation framework, signal vs noise in the portfolio, and becoming a better investor. Here’s an excerpt from the interview:

Gayner: I think the first and foremost lesson that you get in that sense is to have a better appreciation for how hard it is to run a really good business. That’s a challenge. So for instance some of the mistakes of omission that I’ve made over the years would be if you had a really good public investment and you found a company that you thought was doing a really good job, and you had some notion for what it was worth, and you thought it was selling at a discount and you bought it.

Then it went above that, above your target price, if you use that kind of mechanism, or your sales target price whatever, and you sold it. Then you proceeded to realize that probably that sale in the long run was not wise because the things that made that business good continued largely in place and it compounded year after year after year after year, and you made a profit, you wouldn’t be criticized for not making a profit because you did.

But you realize that if you just held on you would have done way way way better over time because it could have compounded. So my appreciation and sense of that has helped me to hold on to public equity positions more so than might have been the case earlier on in my career because I know how spectacular it is to run a really good business.

You can watch the entire interview here:

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