3 Stocks I Sold Last Week

The author sold positions in Alibaba (BABA), Crocs (CROX), and W.P. Carey (WPC) last week to raise cash amid geopolitical uncertainty. Alibaba faces fiscal Q3 results this Thursday after adjusted earnings fell 71% in fiscal Q2; the stock trades at <18x trailing EPS and is ~5% lower over the past year. Crocs has decelerated to slightly negative growth after years of double-digit gains, but guidance of $12.88–$13.55 implies roughly a 6x forward P/E despite the weak near-term outlook. W.P. Carey, up ~11% YTD 2026, was sold despite a recent dividend raise because its ~5.2% forward yield and conservative industrial exposure made it an easy liquidity cut for the author.

Analysis

Alibaba’s heavy AI investments create a classic near-term profitability squeeze with optional, asymmetric upside if its stack lands useful differentiators. The immediate effect is weaker free cashflow and higher capex cadence, which will amplify any downgrade in guidance but also props up domestic foundry and IP demand — a 12–24 month timeline for any material supply‑chain reconfiguration.

Crocs exhibits durable brand optionality: balance-sheet light, high gross margins and a small‑cap‑like retail cycle make it a candidate for mean reversion rather than secular decline, but the path depends on inventory turns and promotional cadence this retail season; expect most of the binary move to play out inside one consumer cycle (3–9 months).

W.P. Carey is behaving like a high‑quality duration asset that’s become less attractive after a sector rerating; its defensive lease book limits upside in a stable macro but leaves it exposed on an earnings‑and‑occupancy trough if GDP softens. Reallocation into shorter duration or higher carry real assets reduces portfolio convexity to a later‑cycle shock.

Cross‑cutting: near‑term catalysts are earnings/guidance across all three and macro/rates prints that can move REIT yields and consumer demand sharply in 2–8 weeks. Structurally, rising home‑grown AI demand in China is a second‑order benefit for local semiconductor suppliers and software/IP vendors, and a potential distributional loser for foreign vendors in that market — monitor policy and export controls as binary inflection points over the next 6–18 months.

Key Decisions for Investors

• BABA — Buy a directional, low‑cost long-dated call spread (12–24 month LEAP debit spread), size 1–2% NAV. Rationale: caps premium paid while preserving upside if AI investments start to monetize; downside = full premium (~1–2% NAV), target 2–4x on positive execution/China recovery within 12–24 months.
• CROX — Re-enter on a post‑seasonal pullback with a hedged equity position: size 0.75–1.25% NAV long stock + buy 3‑month 8–12% OTM protective put. Rationale: captures brand mean reversion while limiting downside to ~10–12% of position over the near consumer cycle; upside >50% if margins/turns normalize within 3–9 months.
• WPC — Trim/lock gains: sell 40–60% of REIT exposure and allocate proceeds to short‑duration credit or higher carry real assets. Alternatively buy a 9–12 month put spread on WPC (pay small premium, capped downside) sized 0.5% NAV to protect portfolio income against a 6–12 month macro softening; reward = preserved NAV versus lost dividends in a downturn.
• Tactical hedge — If worried about China export controls or policy shocks, buy a China‑sensitive volatility hedge (e.g., short-dated put calendar on BABA-sized 0.5–1% NAV) to protect against fast guidance downgrades over the next 2–6 weeks. Rationale: concentrated earnings/event risk with limited premium outlay and quick P&L relief if downside catalysts arrive.