Why One Investor Took $20 Million in Sensient Stock Off the Table Amid a 32% Rally

New York City-based Rivermont Capital Management cut its holding in Sensient Technologies Corporation (NYSE:SXT), reducing its stake by 205,939 shares, a value change of $20.65 million, according to a November 13 SEC filing.

What Happened

According to a Form 13-F filed with the Securities and Exchange Commission (SEC) on November 13, Rivermont Capital Management sold 205,939 shares of Sensient Technologies Corporation (NYSE:SXT) during the most recent quarter. The fund’s stake decreased from the prior period, with the position’s value falling by $20.65 million to $7.19 million at quarter-end.

What Else to Know

The fund sold a significant portion of its SXT position, leaving it at approximately 1.9% of 13F reportable AUM. The position was previously 8.9% of the fund's AUM as of the prior quarter.

Top holdings after the filing:

• NASDAQ:STX: $35.46 million (9.37% of AUM)
• NYSE:FERG: $32.29 million (8.5% of AUM)
• NASDAQ:WTW: $29.40 million (7.77% of AUM)
• NYSE:CLH: $28.48 million (7.5% of AUM)
• NASDAQ:WDC: $27.08 million (7.15% of AUM)

As of Friday, SXT shares were priced at $96.11, up 32% over the past year and well outperforming the S&P 500, which is up 15% in the same period.

Company Overview

Company Snapshot

• Sensient Technologies Corporation develops and markets specialty ingredients, including colors, flavors, extracts, and dehydrated vegetables, serving the food, beverage, personal care, and household-products industries.
• The company operates through three segments—Flavors & Extracts Group, Color Group, and Asia Pacific Group.
• It serves a global customer base of food and beverage manufacturers, cosmetics companies, pharmaceutical firms, and industrial clients seeking specialty ingredient solutions.

Sensient Technologies Corporation is a leading global supplier of specialty ingredients, with a diversified portfolio spanning food, beverage, cosmetics, pharmaceutical, and industrial applications. Its strategy leverages proprietary formulations and technical expertise to deliver value-added solutions tailored to customers' product development needs. The company's established global presence and focus on innovation underpin its competitive position in the specialty chemicals and ingredients sector.

Foolish Take

Against Sentient’s current backdrop, trimming a winning position might look a little counterintuitive. The company just delivered a strong third quarter, with revenue up 5%, operating income rising more than 14%, and earnings per share climbing to $0.87 as margin expansion in the Color segment did most of the heavy lifting. Management also raised expectations for local-currency adjusted EBITDA growth, signaling confidence heading into year-end.

But portfolio math matters. Sensient’s shares have climbed roughly 32% over the past year, materially outperforming the broader market. For a concentrated fund, that kind of move can quietly turn a good idea into an oversized risk, especially in a steady but not hyper-growth business like specialty ingredients.

This sale doesn’t read as a bearish call on fundamentals. Sensient still generates reliable cash flow, maintains pricing power in natural colors, and carries manageable leverage. Instead, it looks like a rebalancing decision after valuation caught up with execution.

Glossary

13F reportable assets under management (AUM): The portion of a fund's assets required to be disclosed in quarterly SEC Form 13F filings.
Stake: The amount of ownership or investment a fund holds in a particular company or security.
Net position change: The difference in the value or number of shares held in a security after buying or selling activity.
Top holdings: The largest investments in a fund's portfolio, typically ranked by value or percentage of assets.
Dividend yield: Annual dividends paid by a company divided by its share price, expressed as a percentage.
Proprietary formulations: Unique product recipes or blends developed and owned by a company, often protected by trade secrets.
Value-added solutions: Products or services that offer additional benefits beyond basic features, enhancing customer value.
Specialty ingredients: Unique or customized components used in manufacturing to achieve specific functions or qualities in end products.
Segments: Distinct business divisions within a company, often organized by product type, geography, or customer group.
Quarter-end: The last day of a fiscal quarter, used as a reference point for financial reporting.
Form 13-F: A quarterly report filed by institutional investment managers to disclose their equity holdings.
TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.