How the Up 40% Free Stock Strategy closed out my Host Hotels & Resorts (HST) position — and left me seventeen shares for free

There is a particular satisfaction, rare enough in this business to be worth writing down, in watching a plan survive contact with reality exactly as it was drawn on paper. This is that story: eighty-four shares of a hotel company, ninety weeks of doing nothing on purpose, and an ending so tidy it almost embarrasses me to report it.

I have always thought hotels were an odd thing for a shareholder to bet on, because the innkeeper’s arrangement with his guest is the oldest one-way street in commerce. From the Roman mansiones that lined the consular roads, to the caravanserais of the Silk Road, to the grand hotels of the last century, the deal never changed: the traveler pays, the traveler sleeps, the traveler leaves, and the money stays behind the desk. No innkeeper in three thousand years of recorded hospitality has ever chased a departing guest down the street to hand the coin back. I bought Host Hotels & Resorts anyway, on the theory that a shareholder, unlike a guest, occasionally does get the coin back — provided he knows which door to knock on, and how long to stand outside it.

On October 18th, 2024, I put $1,500.16 into 84 shares of Host Hotels & Resorts, ticker HST, at $17.8591 apiece. I had spent that same afternoon arguing with myself, in public, on this blog, over HST against its smaller cousin, Park Hotels & Resorts. PK offered the fatter dividend and the cheaper multiple; HST carried the bigger balance sheet, the better margins, and the costlier taste in flags — Ritz-Carltons and Westins, against the more workmanlike Hiltons that filled most of PK’s portfolio. Given the choice between the exciting cheap stock and the boring expensive one, I went, as I generally do, with boring. “Let the force be with HST,” I wrote in the comments that day — the sort of line a man reaches for when he is sixty per cent sure and needs the remaining forty to sound like conviction.

Trade recap

	Date	Shares	Price/share	Total
Bought	Oct 18, 2024	84	$17.8591	$1,500.16
Sold (10% trailing stop)	Jul 10, 2026	67	$22.8627	$1,531.80
Kept — “free shares”	—	17	$0.00 cost basis	worth $388.67 at $22.8627

Free shares kept: 20.2% of the original position (vs. ~28.6% if the exit had filled right at the peak)

Holding period: 630 days — exactly 90 weeks

Implied peak before the trailing stop pulled back: ≈ $25.40/share (+42.2% vs. cost) — past the $25.00 (+40%) trigger

Total position value today (cash back + free shares): $1,920.47, i.e. +28% on the original $1,500.16

Then came the only skill this strategy actually demands: doing nothing, on purpose, for a very long time. Ninety weeks, to the day. That is not a long wait in the life of a real estate investment trust, which fills its rooms one night at a time and has never in its history been in a hurry about anything. It only felt long to the man checking the ticker.

The rule I had set for myself when I first wrote up this approach — filed here under the somewhat grander title of the Up 40% Free Stock Strategy — is embarrassingly simple. Put in roughly $1,500. Wait until the position is up 40%, and not a day sooner. Only then plant a trailing stop, ten points wide, beneath it, and let the market itself choose the exact exit.

HST kept its side of the bargain. By my reconstruction, the stock pushed up to somewhere near $25.40 a share — about 42% above what I had paid for it, comfortably past the $25.00 mark that represented my 40% trigger. Then, as stocks after a run generally do, it eased back. The ten-point trailing stop caught it exactly ten per cent off that high and filled my sell order on July 10th, 2026 — ninety weeks after the buy, and, as it happens, the same day I am writing this — at $22.8627 a share.

Sixty-seven shares went out the door for $1,531.80. I had put in $1,500.16. The trade returned every cent of the capital and left $31.64 on top for the trouble — which, in this age of commission-free trading, is $31.64 more than it would have been years ago, when a nineteen-dollar ticket on each end of a trade would have chewed a gain that size down to almost nothing. The market has, in this one narrow respect, grown kinder to small investors than it used to be. I would not bet on it making a habit of it.

A purist will point out that a trailing stop, by design, catches a stock on the way down from its peak rather than at the peak itself, and that this costs something. Had the sale filled right at that $25.40 high instead of ten per cent below it, sixty shares rather than sixty-seven would have covered the $1,500.16, and twenty-four shares — nearly thirty per cent of the original position — would have gone free instead of seventeen. I have made this same complaint about a different stock before, on this very blog, and I expect to make it again about some stock I have not bought yet. Wishing one had sold at the exact top is the one sin every investor commits and no investor learns from, myself very much included.

Still: seventeen shares of HST sit in the account, and nobody paid for them. Not me — my $1,500.16 is back, with change. Not Host Hotels, either, who merely sold shares at the going rate like anyone else would. Those seventeen shares live in the peculiar accounting country where capital once at risk has been withdrawn from the table while the position it earned stays in play. At Thursday’s price they are worth $388.67, and they will go on collecting a dividend four times a year on money I no longer have exposed to the fortunes of a single hotel chain — which is either free money or the purest form of gambler’s arithmetic, depending on which economist you ask, and how much he’s had to drink.

I am aware that boasting about seventeen shares of a hotel REIT is not, by the standards of this business, a story anyone puts in a memoir. Fund managers do not retire on trades like this one. But I never promised to run anything grander than a peanut stand with a login to a brokerage account, and the peanut stand had, this particular month, an unusually good one. Most of my picks do not close this cleanly. Several, filed with the appropriate shame under My Investing Mistakes, never get within shouting distance of the 40% line at all. This one obeyed the plan down to the decimal, which happens rarely enough in markets, in weather, and in Italian politics that it seemed worth setting down before I forget how it felt.

Let the force, as I said the day I bought it, be with HST. It was. And on its way out, it left the door open and let me keep the room.

Let it rise. Take your capital back. Let your free shares grow forever. This month, for once, the motto and the arithmetic were saying exactly the same thing.

Disclaimer: as always: this is one small, uneducated investor telling you what he did with his own peanuts, not what you should do with yours. Do your own homework before anyone’s trailing stop touches your money.

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