With some regret, today we executed our second sell ever (the first was Gap in October 2000): The Rule Maker managers were unanimous in their decision that JDS Uniphase (Nasdaq: JDSU) was not suitable for this portfolio. JDS is a leader in its industry, yes. It has lots of cash and no debt, yes. It has high gross margins and the potential for high net margins, yes. But we overpaid for a company that we didn't understand well enough. Not only are optical components difficult to understand in and of themselves, but JDS Uniphase is the product of numerous acquisitions, which makes the company overall an even tougher nut to crack. Further, even at its much reduced valuation, the company is still priced for significant growth.

Sold   32   JDSU $21.61  $19.95      $671.57