The CNBC Investing Club, led by Jim Cramer, is making strategic adjustments to its portfolio by selling 50 shares of Danaher Corporation at approximately $256.35 per share. This decision comes in response to Danaher's stock rallying nearly 9% over the past month, prompting the club to reassess its portfolio weighting. After this sale, the club will hold 525 shares of Danaher, reducing its weighting from about 4% to 3.65%.
The move aligns with the club's disciplined approach to manage portfolio risk, especially in light of the S&P Short Range Oscillator indicating an overbought market condition. Following Monday's session, the oscillator surged to 7.7% from 5.61%, prompting the club to trim positions and raise cash to safeguard against a potential market downturn.
Despite the sale, the CNBC Investing Club remains long on Danaher, recognizing the company's potential. The life sciences and diagnostic tools sector, including Danaher and Thermo Fisher, has been trading positively, bolstered by encouraging data from a European peer. The club plans to retain a substantial stake in Danaher in anticipation of a promising outlook for the bioprocessing market during upcoming earnings announcements.
The decision to sell also reflects Jim Cramer's strategic rules for trading. He waits 72 hours after issuing a trade alert before executing trades on CNBC TV and adheres to a 45-minute wait period after sending an alert before buying or selling stocks in his charitable trust's portfolio.
Since late October, the club has strategically added to its Danaher holdings on five occasions, beginning at around $255 per share. The most recent purchase occurred just two weeks ago at approximately $240 per share. Despite these accumulations, the club decided to downgrade its rating on Danaher shares to a hold-equivalent 2, opting for prudence amidst the stock's recent surge.
Moreover, the club anticipates realizing a loss of about 6% on shares purchased back in January 2022. This calculated adjustment is part of the club's broader strategy to optimize its portfolio's performance and mitigate potential risks.