We’re trimming a bank stock on tear since earnings, booking nearly a 100% profit
We're selling 100 shares of Wells Fargo at roughly $65 each. Following Friday's trade, Jim Cramer's Charitable Trust will own 2,340 shares of WFC, decreasing its 4.41% weighting to from 4.6%. We're ringing the register on some Wells Fargo shares after a huge run since third-quarter earnings on Oct. 11. The results were better than expected , with signs of troughing net interest income (NII) and clean beats on non-interest income, or fee-based revenue, and non-interest expense, or operating expenses. This forced the Street to put a higher multiple, or do a so-called re-rate, on the bank's projected earnings per share (EPS) because of its revenue diversification, operating leverage, and the strong return it earned on its assets. WFC YTD mountain Wells Fargo YTD Wells shares have been on a tear since the report, rallying from $57.75 to $65.50 — good for a gain of nearly 14%. Over the same period, the S & P 500 has only tacked on about 1%. This outperformance has caused our Wells Fargo position to swell into one of the portfolio's largest, especially after our three separate buys totaling 440 shares in the low $50s when the market broke down in early August. Due to this swift move higher to levels last seen in 2018 before the Fed put a cap on the bank's assets, we think it is prudent to take some profits. We're also downgrading the stock to our 2 rating , preferring to buy again on a pullback. From this sale, we'll realize a fantastic gain of 92% on stock purchased in January 2021. We should note that this sale and downgrade do not reflect any change in our long-standing positive view on Wells Fargo since Charlie Sharf took over as CEO in 2019. If anything, we felt even better about the trajectory the bank is on after Scharf's appearance on "Mad Money" last week. We are most encouraged by the bank's progress on risk controls and regulatory oversight. (Jim Cramer's Charitable Trust is long WFC. 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.
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