Jim Cramer’s Charitable Trust is selling 560 shares of Wells Fargo at roughly $60 each, which will decrease the trust’s ownership to 4.0% from 5.08%. The decision to sell is based on the principle that discipline trumps conviction, and it is important to take gains along the way, particularly when a stock becomes too large of a position due to outperformance. The trust’s general rule of thumb is to sell when a position reaches around a 5% weighting in the portfolio to prevent greediness. This strategy was successfully implemented with Meta Platforms and Disney earlier in the year, resulting in gains and protection from subsequent stock declines. Although the Wells Fargo sale does not reflect a change in the trust’s thesis on the stock, it is a decision to resize the position and lock in profits while the stock is trading near the $62 target price.
The trust initially sold some shares of Wells Fargo in late February when the stock’s weighting neared 5%, locking in gains at around $52 per share. The stock has since rallied to $60 following good earnings results, prompting the trust to sell more shares. CEO Charlie Scharf has made progress in addressing the bank’s legacy regulatory issues and cutting costs while investing in technology and capital markets. Although there is more potential for growth in Wells Fargo, the trust’s discipline calls for booking profits as the stock approaches the $62 price target. Overall, the trust will realize an average gain of about 78% on shares purchased in January 2021. The decision to sell reflects the trust’s disciplined approach to investing and managing positions to prevent becoming overly concentrated in any single stock.
As a subscriber to the CNBC Investing Club with Jim Cramer, investors receive trade alerts before Jim makes a trade for his charitable trust. Jim follows a waiting period after issuing a trade alert before buying or selling a stock in the trust’s portfolio, typically waiting 45 minutes or 72 hours if the stock has been discussed on CNBC TV. It is important to note that the information provided by the investing club is subject to terms and conditions, privacy policy, and disclaimer. There is no fiduciary obligation or duty created by receiving information from the club, and no specific outcome or profit is guaranteed. Subscribers should carefully consider their own investment goals, risk tolerance, and overall portfolio strategy when implementing trades based on the club’s recommendations.
The decision to sell shares of Wells Fargo is part of the trust’s ongoing effort to manage its portfolio positions in line with its disciplined approach to investing. By selling stock when it reaches a 5% portfolio weighting, the trust is able to lock in gains and prevent becoming overly exposed to any single stock. This strategy has been successfully implemented with other stocks earlier in the year, resulting in gains and protection from subsequent declines. The trust remains positive on the long-term prospects of Wells Fargo and appreciates the progress made by CEO Charlie Scharf in addressing regulatory issues and improving the bank’s operations. However, the decision to sell reflects the trust’s commitment to discipline and risk management in order to optimize returns while mitigating potential downside risks.
Overall, the trust’s sale of Wells Fargo shares should be viewed as a position resizing move rather than a reflection of a negative outlook on the stock. The trust will realize significant gains on the stock purchased in January 2021, showcasing the benefits of taking profits along the way. Subscribers to the CNBC Investing Club with Jim Cramer receive trade alerts before trades are executed, allowing them to follow along with the trust’s investment decisions. It is important for subscribers to understand the terms and conditions, privacy policy, and disclaimer associated with the club’s information, as well as to consider their own investment goals and risk tolerance when implementing trades based on the club’s recommendations. The trust’s disciplined approach to investing and managing positions is aimed at optimizing returns and managing risk in order to achieve long-term investment success.
