Lately, I’ve been giving a lot of thought to Shopify (SHOP), a company I scored late last year. At the time it was an Enterprise level holding in the Freedom Portfolio. That was before the stock price went absolutely bonkers in 2019:

That’s right. While the S&P 500 is up an impressive 15% over a little over 6 months, Shopify is up a mind-boggling 120% during that same time. That’s incredibly, and has been enough to move it from an Enterprise level to a Babylon 5 level position that rivals Amazon (AMZN).

Additionally, Shopify is now up around 595% from where I initially bought it, which brings it incredibly close to Netflix (NFLX) as my all-time best performing position.

It’s unclear to me exactly what is driving Shopify relentlessly higher, and I can’t find any justification for it more than doubling over the past 6 months. Everything about the situation screams to me that the stock is over-priced and is due for a big pull-back on the first bit of disappointing news.

So should I be selling shares? I have no problem trimming my position in a company when I see potential problems on the horizon or my investing thesis has changed, but that’s not the case here. The investing thesis is stronger than ever and a rapidly escalating stock price isn’t exactly a “problem on the horizon” for the company. Is a big run up in stock price alone a good reason to sell?

In many ways, Shopify characterizes one of the big issues with portfolio management that I struggle with: Should the size of a position in my portfolio more accurately represent my conviction in the company or its past performance? In other words, should I let my winners run or trim the position when it gets to be too big?

I like Shopify as a company a lot, but I like Amazon (and a lot of companies with smaller positions in the Freedom Portfolio) more. It has a P.A.U.L. score of 14, which is decent but smaller than many other companies in my portfolio. Back when I profiled Shopify I even specifically said, ” I’m certainly not looking to sell right now, but if there comes a time when I want to free up some capital to start or add to another position, then I might consider trimming some of my Shopify position.”

On the other hand…

I really like the idea of letting my winners run, and I desperately want to avoid a situation where I cut my flowers and water my weeds. The situation with Shopify looks eerily similar to a situation I had with Netflix almost exactly a year ago. Netflix was on an almost identical run where it had effectively doubled in 6 months and I was torn on what to do. Every time in the past that I had sold Netflix stock I had regretted it greatly. The shares of Netflix that I have sold in the past few years alone would represent a combined position of around 18% in the Freedom Portfolio. And I did all of that even after writing about how selling Netflix in 2004 was my biggest investing mistake (side note, those 610 shares that I sold would now be worth nearly $1.5 million).

So despite everything screaming that Shopify is overvalued right now, I’m sticking with it and not trimming my position at all. I have no idea if this is something I’ll regret or not, but no matter what happens, at least I won’t regret it as much as selling Netflix in 2004.