Objectivity is the key to selling stocks successfully.

A rigorous commitment to valuation is just as critical to the exit of positions at Cambiar as the entry, and helps keep the process rooted in objectivity.

Once a stock approaches our target price, we will most likely begin to trim the position to reflect that the valuation disconnect identified at purchase has largely been rectified by the market. While we may continue to hold the position if we remain constructive about the ongoing fundamentals, we recognize that the more prudent course of action is to reallocate capital into companies that we believe to offer a more compelling risk-reward tradeoff.
In an attempt to mitigate stock-specific risk, we will also trim a holding if it becomes an outsized position within the portfolio.

Cambiar is mindful of opportunity cost; as a result, both successful and less-successful stocks are trimmed and/or liquidated if the more prudent course of action is to reallocate capital into companies that offer a more compelling risk-reward tradeoff. Stocks will be sold from the portfolio if a decline in fundamentals becomes apparent, or the anticipated catalysts fail to materialize. Where practical, Cambiar seeks tax-efficiency for our portfolios; however, we will not allow tax or timing issues to override capital preservation considerations.

Cambiar employs a formal review process for any holding that incurs a material price decline from original purchase, or relative to the overall market. At that time, the sponsoring analyst is responsible for presenting a comprehensive review of the position to the full investment team. If it is agreed that the original purchase thesis remains intact, the decision may be made to add to the position; however, this add will only occur once.

We believe that a consistent implementation of our sell discipline has enabled us to capture gains in those stocks that have been profitable investments for our clients, as well as limiting capital loss in situations where there is a deterioration in the fundamentals that supported the initial investment decision.