Getting out of TransAlta

I have owned TransAlta (TA.TO) for some time and the stock has not performed well.  It has weighed heavily on my portfolio, especially in the last few months.  It is alway painful to sell for a loss (I keep hearing “it’s even cheaper now so you should keep it” in my mind) but I have disliked this stock for some time and wished I had sold earlier.  Better late than never.

SELL TA.TO @ $14.13

POSTMORTEM

Today, 4th October, this looks like a bad call.  TransAlta closed today at $15.40, up 9% since I sold it.  I was glad to get out of this stock and I would not buy it again now based on its fundamentals, but I sold at the bottom (at the time of most fear).  It is hard to judge a value trap versus a stock that is on sale (irrationally cheap).  Bottom line: I should have gotten out of this stock in March 2012, rather than doubling down.

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6 comments

  1. Trader Rob · September 5, 2012

    Funny I just sold TA as well so did my brother I had debated using a limit order to see if I could reduce my lose but in the end I decided against it and glad I did, sold it just before it gaped down. I also wrote a blog post on it as well

    http://www.thedividendtrader.com/2012/09/transalta.stock.analysis.technical.analysis.html

  2. Roth Niven · September 6, 2012

    Hi Rob. I had been wanting to sell TA.TO for a couple of months but kept hanging in there thinking, “it can’t go lower, can it?”. I finally pulled the plug. I had a similar experience with ERF.TO. After watching it go down for months I finally got out at $18 in March. Selling ERF was a good move and hopefully selling TA now is also a good move. Happy trading!

  3. Trader Rob · September 6, 2012

    Thanks, for me it was an easier call as I inherited it from my Dad so I was only down a bit. I also have PGF but that am down almost a grand and like every one I hate selling for a loss.

    Usually I tell everyone that when (dividend) stocks go down it means they are “on sale” did you ever consider simply holding it after all it has a good dividend?

  4. Trader Rob · September 6, 2012

    Also it wasn’t a stock I was interested in holding so selling was an easy call. I may also pick it up again once it hits bottom, of course finding bottom isn’t always the easiest thing to do.

  5. Roth Niven · September 6, 2012

    Hi Rob, Yes sometimes when a dividend stock goes down it is “on sale”. But occasionally the decline is price reflects a decline in earnings or cash-flow meaning that the value is going down too. It’s hard to differentiate between “good stocks on sale” and “bad stocks in decline” (lots of people were caught out by Yellow Media) but I think that TA will cut its dividend soon.

  6. Trader Rob · September 8, 2012

    I’ve kind of divided my stocks into two piles. Permanent holds, things like banks and BCE that, short of a financial collapse will never sell as they regularly increase their dividends. On the other side are stocks I’m interested in Beating the TSX (even wrote an extensive blog post on it) but the problem is I prefer to buy them on the cheap and most are up quite a bit, meaning in a year when I re-balance more than likely they will be lower.

    Also I’m watching MLF and TA to see if I can catch them on a bounce

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