Business

Two sellers, one buyer and the reason behind the transactions


Jim Cramer on “Mad Money”.

Scott Mlyn | CNBC

(This article was first sent to members of the CNBC Investment Club with Jim Cramer. To get real-time updates in your inbox, Sign up here.)

We sold 25 shares of Estee Lauder (EL) at around $356.66. In addition, we bought 25 shares of Eli Lilly (ONLY) at around $241.91. In the end, we sold 200 shares of Marvell Technology (MRVL) at around $92.06.

  • After the transaction, the Charity Fund will own 100 EL shares, 425 LLY shares and 1,100 MRVL shares.
  • This reduction will reduce the share of EL in the portfolio from about 1.07% to about 0.86% and reduce the share of MRVL in the portfolio from about 2.80% to 2.38%.
  • Eli Lilly’s share of the portfolio will increase from about 2.34% to about 2.48%.

We’re curtailing the strength of two stocks that are trading at or near their all-time highs, and picking stocks in a healthcare company that’s been riding high on today’s market.

Estee Lauder, Now you may be wondering why we don’t sell all of our stock. Why not create our inner Steve Miller Band channel and “take the money and run” in this little spot? Also, we recently started a position in Chevron, and we usually don’t want to order a new stock before take-off.

In the end, we decided to keep the rest of our ELs. This is a specially run company with high-quality franchises that will benefit even more as travel patterns normalize. We may change our mind on the next leg higher, but we have always viewed EL as a core position and we do not like to trade around stocks that we consider core.

This cut would close a massive gain of about 20% on the shares we bought in mid-May.

Eli Lilly is trading lower on Tuesday according to what we believe to be a misleading study this morning. Analysts at Guggenheim have reiterated their Buy rating on LLY and raised their price target to $272 from $268. While analysts remain bullish on the company over the long term, we think what may shake some investors today is Guggenheim’s belief that Eli Lilly management will provide earnings guidance. earnings per share below the 2022 consensus at their December 15 Investor Event.

This is not new news to us. If you look back at our article During the company’s third quarter, we specifically outlined how the company would face year-over-year hardship due to the minimal revenue contribution from COVID-19 therapies. Additionally, management said operating margins will come under pressure next year as investments support the testing and launch of their industry-leading pipeline. We would think that the market is more prepared for this kind of information and analysts will adjust their estimates at this time. But they didn’t, and that’s why we think the stock can buy today and again if it takes a hit when official guidance is released.

In the long term, we cannot stress enough how large Eli Lilly’s drug pipeline with diabetes/obesity drugs tirzepatide and donanemab for Alzheimer’s disease is. In fact, Guggenheim said in today’s research note that it forecasts “a decade of unprecedented double-digit EPS growth from 2021-2031” based on projects Eli Lilly is working on and their portfolio growth.

Marvell Technology It was a tough sale for us. If you read our analysis of Marvell’s Q3 earnings report,, then you know how much we like the company. We have full confidence in CEO Matt Murphy and how he has positioned Marvell as a leader in growing trends over the years in data centres, 5G networks and automotive chips. Shares of Marvell Tech are now up nearly 30% in the past three trading sessions and are up more than 90% year-over-year. We think the move isn’t over yet, but if we like stocks long-term, we can’t ignore the discipline of slowly cutting back on stocks as they hit all-time highs. This is especially true for positions in the high-tech sector. This avoidance of greed is what protects us from periods in which people can get caught in the crossfire if tech stocks plummet, like the market has experienced over the past month.

Marvell has enjoyed massive philanthropic success over the years, and this installment will post a roughly 270% gain on the shares we bought in August 2019.

The CNBC Investment Club is now the official home of My Charity Foundation. It’s where you can see every move we make to our portfolio and get insight into my markets before anyone else. The charity and my articles are no longer affiliated with Action Alerts Plus in any way.

As a subscriber to the CNBC Investment Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Typically, Jim waits 45 minutes after sending out a trading alert before buying or selling a stock in his charity portfolio. If a trade alert is sent before the market, Jim waits 5 minutes after the market opens before taking the trade. If a trade alert is given less than 45 minutes during the trading day, Jim will execute the trade 5 minutes before the market closes. If Jim had talked about a stock on CNBC TV, he would have waited 72 hours after issuing a trading warning before taking a trade. See here for investment disclaimer.

(Jim Cramer Long Term EL, LLY, MRVL and CVX Foundation)

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