This week, GlaxoSmithKline
Half of the sale was a buyback by Quest at $54.30, and the other half went in a public offering at $56.25. Shares are currently trading north of $58.
Is that a sign that you should sell shares, too? That depends; do you have somewhere else to invest the proceeds?
Glaxo certainly does. Its shares are fairly cheap, and a buyback could help its shareholders more than holding on to the shares of Quest.
I'm reminded of this video of Motley Fool co-founder David Gardner a few years ago talking about his sell signal. Essentially he sells when he finds a better investment than the one he's in right now. That might mean selling a winner or a loser, but the important thing is that he's always chasing higher returns.
Are there better returns out there than Quest? Maybe, but the risk-reward profile doesn't look too shabby at this point either. The company trades at 14.5 times earnings, a little cheaper than Laboratory Corporation of America
Lab Corp. has been growing faster, but that's mostly because it stole UnitedHealth Group's
Follow Glaxo's lead if you have a better place to invest, but Quest still looks like a good long-term bet to me.
Buffett thinks this "picks and shovels" health-care company should profit, regardless of Congress' health-care reforms.