Recently, Fool.com contributor Matt Frankel, CFP, decided to hit the "sell" button on Medicare Advantage company Clover Health (CLOV 1.49%). But unlike with most stocks, he didn't sell this one because of the company's long-term potential. In this Motley Fool Live video clip, recorded on July 2, Frankel discusses his reasons for selling Clover with The Motley Fool's Chief Growth Officer Anand Chokkavelu.
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Matt Frankel: Before we move on from these two, I wanted to address what J.K. just said about meme stocks. He says, "Matt, can you elaborate a little more on why you don't like meme stocks? If you like the business, can handle the wild swings, why wouldn't you? I mainly ask because I hold Clover." First of all, most meme stocks are not great businesses. That's number one. I'm adamantly opposed to anybody buying AMC (AMC 3.96%) or GameStop (GME 6.16%), for example. But if I like the business, it will come back down to earth. If it's trading at a valuation that doesn't make sense. Especially I bought Clover at about $6 a share I sold it at about $18 two months later. I'm fine pocketing a triple and moving on. I think Anand was in the same camp where it's like a borderline conviction stock for them. If it's something, I'll name one of my highest conviction stocks, Pinterest (PINS 4.04%). If Pinterest were to shoot up to $200 a share tomorrow because it was on a Reddit board, I would hold the stock. I wouldn't sell it because it is one of my highest conviction names. Really depends on how high my conviction level is in the stock and I haven't felt the mean stock where it was above a loaded if the valuation's good.
Anand Chokkavelu: I think Clover is one except for the there is enough upside potential where I'm like no. But it's that dream for me, I love that it's a meme stock because, there might be a price I can sell out where I'm happy to just say, well, you know what? Let's say $40. I don't know what the price is exactly. I'd have to work closely. But, hey, yeah, I'll take this and if I'm wrong and it shoots up to $200, well, maybe I just can live with that. But on low-conviction stocks, there's nothing I like better than zooming up and giving me the opportunity at least.
