We’re trimming a winner near all-time highs after patiently waiting for the market to rally
We’re selling 20 shares of Humana (HUM) at roughly $504.02 each. Following Tuesday’s trade, Jim Cramer’s Charitable Trust will own 100 shares of HUM, decreasing its weighting to 1.83% from 2.19%. Here’s a look at the factors behind our small Humana sale, starting with the S & P 500 on track for its largest two-day rally since March 2020, the month Covid was declared a pandemic. It’s quite the turn of events in the first two trading days of October on Wall Street after a miserable September and third quarter, which marked three consecutive quarters of declines for the index and its longest losing streak since 2008. What a difference a new month can make. We were very aggressive with our buying over the past two weeks, consistently adding to positions like Amazon (AMZN), Salesforce (CRM), and Honeywell (HON) to name a few as the market moved lower and lower and became more and more oversold. Though it wasn’t easy to do all that buying into selloffs, the market was the most oversold it had been since the March 2020 pandemic crash and the December 2018 market low, according to the S & P Oscillator. It was an extreme oversold moment. As we said a week ago, the recent history suggested it was more rewarding to be opportunistic — hold your nose and do a little buying when the S & P Oscillator was that oversold, and it got it right again. Even though the Oscillator still pointed to an oversold market at a minus 9.25% as of Monday’s close, we finally got the big bounce we had been patiently waiting for. Given the run over the past two days, our discipline says it’s time to make incremental sales and replenish our cash position that we depleted at lower stock prices. Tuesday’s Humana trim will be our highest sale price to date and only a few percent off the stock’s all-time high. This small trim does not reflect any change to our investment thesis in Humana, and we have no plans to exit this position in the near-term. We still believe the health insurer is in a position to accelerate its Medical Advantage subscriber growth rate in the years ahead thanks to the aggressive investments management made to make its offerings more competitive. Humana’s lack of interest rate, economic and strong dollar sensitivity are also defensive characteristics we appreciate during these highly uncertain times. HUM is not affected by currency fluctuations because 100% of its business is domestic. With the small sale, we’ll realize a small gain of about 8% on HUM stock purchased in April 2022. (Jim Cramer’s Charitable Trust is long HUM, AMZN, CRM and HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
