Analysis: DHR GE

Shortly after the opening bell, we will be selling 200 shares of Danaher (DHR) at a bid/ask of roughly $126.18/$126.82. Following the trade, DHR (650 shares) will represent 3.09% of the portfolio.

Now that are trading restriction have cleared*, we will trim our position in Danaher and lock in an impressive gain of about 53% on our earliest remaining lots. This sale is not a "distribution-related" sale like we made last week here, rather it's about taking gains and not being greedy after the stock's huge move to the $120s on its acquisition of (GE) BioPharma's assets which you can read about here. Last Tuesday in our Alert here is when we first indicated our intent to trim shares when we were not restricted.

Danaher is a terrific multi-year story in the portfolio and represents a perfect example of why you can count on strong leadership teams over the long run. In our beginnings with this position in 2017, the stock struggled to move past pressures in its Dental business (see our Alert here) despite solid performance everywhere else within the company. When others wrote off the stock because they did not think management could fix Dental, we routinely expressed our view that this high-quality management team would either figure it out, or just get rid of this business and unlock value.

What happened next? In October of that year, our trust in management was rewarded when the positive comps in Dental (see our Alert here) jump-started a run to the lows $100s from the $80s. The company then decided it would spinoff its Dental business during the summer of 2018, a portfolio action we felt would help DHR command a higher multiple in the market.

Then last week, the GE BioPharma deal was announced, and shares quickly jumped to the $120s from the $100s. It's a transformative deal that doubles down on the high-margin, strong growing Life Sciences industry and it should lead to further gains down the road, however, the M&A catalyst is now off the table due to the size of the deal and we cannot let ourselves get greedy here. This makes now an excellent time to lock in our large gains while also raise cash and improve our future optionality.

*For more information about our trading restrictions, please see our form post here.