I sold DN due to my lack of conviction on the Chemical Sector. I absolutely have no idea how this cycle works and to be specific how DN’s product differentiates from other competitive products in the same segment. I did not know much about their business when I first bought shares of DN in 2019. I just followed a number where it reported 100% YoY revenue growth. After that I got lucky as COVID created a tailwind for their business and at some point of time in 2020 it became 10 baggers stock for me. I kept on holding as long as reported numbers showed YoY revenue growth. This quarter even revenue growth fell and my number based rules prompted me to sell the shares. Again I followed numbers while selling the same shares with 6X gain.
It could very well be another 6-10X from here on. But that’s fine. It’s better to follow numbers when one does not have much knowledge on the underlying business or the overall sector. To remain consistent, I try to avoid mixing business and number based stock picking models with each other as much as possible.
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