We are reducing two of our holdings that are trading near their highs
The Linde AG logo on a liquid hydrogen tanker truck delivering fuel to the Linde hydrogen plant in Leuna, Germany on Tuesday, July 14, 2020.
Rolf Schulten | Bloomberg | Getty Images
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After receiving this email, we will sell 100 shares of Abbott Laboratories (ABT) for approximately $ 141.16. Additionally, we will sell 50 shares of Linde (LIN) at around $ 343.53.
Following the transactions, the Charitable Trust will own 450 shares of Abbott Laboratories and 325 shares of Linde. This reduction will reduce ABT’s weight in the portfolio from approximately 1.83% to approximately 1.51%, and the reduction will reduce LIN’s weight in the portfolio from approximately 3.04% to 2.66%.
We are making some cuts this afternoon in stocks trading at or near all-time highs. Having regularly bought so many different stocks at lower prices as the market has fallen over the past month and changed, we believe it is prudent from a portfolio management perspective to reduce a few positions and replenish the cash we have deployed at lower levels in the return and rally of Santa Claus.
The first is Abbott Laboratories. ABT took advantage of recent market volatility and gained more than 10% in December, with investors likely resuming their earnings estimates for 2021 and 2022 due to the recent surge in demand for BinaxNOW Covid home tests. ‘Abbott. They cannot be found in stores. While we’re quickly learning that the tests will be with us for much longer than we thought six months ago, one thing we’re not so sure about is the supply. As part of its plan to tackle the recent omicron outbreak, the Biden administration has pledged to deliver 500 million home test kits across the country. What we still do not know is where these will come from or which manufacturer. Due to the scarcity of testing, one of our concerns is that the government might need to procure tests from companies other than Abbott – and possibly even overseas – to meet their $ 500 million goal. . The more tests the better from a virus-fighting standpoint, but flooding test availability could hurt Abbott’s franchise and, therefore, stock. For this reason, we believe it is safe to lock in some big gains after the run that the stock just had.
We will realize a gain of approximately 74% thanks to this reduction on the shares purchased in October 2019.
Our second garnish will be at Linde. Our decision to post profit this afternoon does not reflect any change in rhetoric or an appeal against this blue chip industrial gas company. Instead, we’re feeling a little greedy after the strong run to new highs, and it’s not exactly the cheapest name in the portfolio, with the stock trading at around 29.5x earnings estimates. 2022. But in the longer term, we are fans of Linde and believe it has more leeway as demand is coming from all of its end markets. As proof, Linde ended the third quarter with a record backlog, which provides visibility of mid-to-single-digit earnings per share growth over the next four years.
We will realize a gain of around 38% on stocks purchased in February 2021 from this trim.
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(Jim Cramer’s charitable trust is long ABT, LIN.)