There's an old Wall Street saying that separates the grown-ups from the kids: "Nobody ever went broke taking a profit."
Sounds obvious, right? Damn, but if it were easy, everyone would do it. The reality is that human beings are biologically wired to be greedy. To hold a stock while it's ripping and whisper to themselves: "keep going, keep going, keep going..." — until the day it doesn't.
Disciplined Growth Investors (DGI), a Minneapolis-based firm managing over $6 billion, did exactly the opposite. According to the latest filings, the firm trimmed its position in InterDigital (IDCC) after a vicious run-up in the wireless technology company's share price.
And here's the detail the market ignores: the firm's name is literally "Disciplined Growth." That's not an accident. It's a philosophy.
Who Is InterDigital and Why the Stock Went Ballistic
For those who don't know, InterDigital is one of those companies most people have never heard of, but that's buried deep in everything you use. They own fundamental patents in wireless technologies — 5G, Wi-Fi, video coding. Basically, if any tech giant wants to manufacture phones or networking equipment, they have to pay royalties to InterDigital.
It's the kind of business Charlie Munger would call a toll bridge. You can complain about the price all you want, but there's no way around it.
The stock had a monster rally over the past few months, fueled by global 5G expansion, new licensing deals, and the market's eternal hunger for anything with the word "technology" in the prospectus.
DGI's Move: Surgical Coldness
While retail investors and Twitter "analysts" were drooling over IDCC's momentum, Disciplined Growth did what it does best: followed the process.
Trimming a position after a strong run isn't pessimism. It's risk management. It's what separates a firm that survives for decades from a fund that turns to dust in a drawdown.
Think of Bruce Michael Kovner, one of the greatest commodity traders in history. The guy once said: "The most important thing is risk management, risk management, risk management." He said it three times, in case you didn't get it the first time.
DGI isn't saying InterDigital is a bad company. They're not saying 5G is going to flop. They're saying something much simpler and much more powerful: the position got too large relative to the portfolio after the run-up, and it needs to be rebalanced.
It's the same logic Benjamin Graham preached in the 1940s. It's not sexy. It doesn't get likes on Instagram. But it works.
The Golden Lesson Nobody Wants to Hear
Here's what bugs me when I look at the average retail investor: people have no process. They buy because their neighbor bought. They hold because "it'll come back." They sell in a panic, when they should have sold during the euphoria.
DGI has a clear mandate. When a position grows beyond certain parameters due to price appreciation — not because the thesis changed, but simply because the price ran too far — they cut it. No emotion. No ego. No "yeah, but it could go higher."
It's exactly what Nassim Taleb preaches about convexity: you need to be willing to give up a little upside to protect yourself from a downside that could destroy you. Asymmetry is everything.
You know what the opposite of that looks like? It's the guy who bought IDCC at $50, watched it go to $200, didn't sell a share, and now sits there praying the stock doesn't correct 40%. That's not investing. That's Russian roulette with extra steps.
The Wireless Patent Market Isn't Dead
Important: none of this changes the fact that InterDigital is in a structurally favorable sector. Patent licensing in telecom is an absurdly profitable business with margins that would make any retailer weep with envy. The global transition to 5G and eventually 6G guarantees recurring revenue for years.
But price matters. It always has, and it always will.
DGI understands this. The question is: do you?
When was the last time you looked at your portfolio and had the discipline to sell something that was winning — not because the thesis broke, but because the position size had become a risk?
If the answer is "never," maybe the problem isn't the market. Maybe the problem is the mirror.
