3 Stocks I Sold Last Week

The author sold full positions in Alibaba, Crocs and W.P. Carey in the first three trading days last week. Alibaba faces margin pressure (adjusted earnings down 71% in fiscal Q2), is trading ~5% lower over the past year at <18x trailing EPS, and has a fiscal Q3 update this week with profitability expected to remain pressured into fiscal Q4. Crocs was fully exited despite a cheap valuation (guidance $12.88–$13.55 EPS, ~6x forward), after revenue deceleration following five years of double-digit growth; near-term growth outlook is unclear. W.P. Carey was sold after an ~11% YTD 2026 gain, despite a recent dividend raise, with a ~5.2% forward yield viewed as unimpressive and potentially vulnerable if the economy weakens.

Analysis

Alibaba’s near-term margin squeeze is a funding decision, not a demand problem — that distinction matters for positioning. Large, deliberate AI chip and international growth investments create a binary path over 6–24 months: if Alibaba capitalizes on domestic supply-chain nationalization it will materially reduce reliance on US vendors but also hand incremental commercial AI hardware spend to specialized domestic EDA, foundry, and packaging suppliers. For markets, that implies short-duration volatility around earnings (days–weeks) but a multi-quarter dispersion between China-native infra plays and Western incumbents (NVDA/INTC) depending on outsourcing choices.

Crocs is cheap for a reason: integration and channel-health ambiguity. With consensus earnings priced at single-digit multiples, the path to upside is inventory turn normalization and re-acceleration of direct-to-consumer margins over 3–12 months; the downside is a persistent mid-single-digit top-line drift that keeps multiples anchored. Second-order: a prolonged consumer softness would disproportionately hurt mall/wholesale-dependent casual footwear and create share opportunities for lower-cost digital-native brands.

W.P. Carey sits in a sweet spot for income but is exposed to macro-induced tenant stress if growth stalls. The trade-off today is modest yield versus asymmetric downgrade risk to NAV in a recession; a falling-rate environment would re-rate REITs quickly, but that is a policy-dependent (quarters-to-years) catalyst. For portfolio construction, treat WPC as a high-quality, short-duration real estate instrument — useful to own through a careful hedging program rather than as an unhedged income anchor.

Key Decisions for Investors

• BABA — Tactical earnings hedge: buy a near-term (earnings-week) put spread sized at 1–2% of equity exposure (risk = premium). Target payoff ≥2.5x if the print shows continued margin erosion or weaker guidance. Rationale: contains downside from a binary negative update while preserving capital if the report is neutral/positive.
• BABA/NVDA pair — 6–12 month directional: short BABA stock or buy protective puts (size 2–4% portfolio) and simultaneously add a long NVDA call position (or 6–12 month call spread) equal dollar notional. Reward: capture divergence between a China-internalization path (BABA underperforms) and secular AI acceleration (NVDA outperforms); risk: positive Alibaba surprise compresses spread unexpectedly.
• CROX — Mean-reversion starter: deploy a small, asymmetric exposure (1–2% portfolio) via a 3–6 month call spread or buy on a 10–15% pullback. Reward: low entry multiple (6x forward) implies >2x upside if comps re-accelerate; risk: continued revenue softness keeps multiple depressed.
• WPC — Income defense: trim to target allocation and buy a 6–12 month collar or buy-put to cover 50–75% of forward dividend exposure. If you want yield, swap into higher-duration REITs only after securing downside protection; reward: preserves yield while limiting NAV downside in a macro drawdown.