We are selling 215 shares of Wells Fargo at roughly $82.70. Following the trade, Jim Cramer’s Charitable Trust will own 1,785 shares of WFC, decreasing its weighting to about 4.0% from about 4.50%. We’re right-sizing our Wells Fargo position and locking in gains following the stock’s full recovery from its earnings-driven slide two weeks ago. The stock fell more than 5% in the session after management lowered its full-year net interest income (NII) outlook due to the bank dedicating more of its balance sheet toward supporting its fee-based market business. We disagreed with the sell-off and raised our rating to a buy-equivalent 1 in response because what was lost in NII would be made up in non-interest revenue. Given the full recovery in the stock price, the market has come around to our view, prompting us to downgrade our rating back to our hold-equivalent 2 and lock in gains. This sale does not reflect a change in our long-term thesis in the bank. The transformation under CEO Charlie Scharf has been extraordinary, and it extends beyond investments in risk and controls that led to the removal of the Federal Reserve-mandated asset cap in June. His push to build out a larger investment bank and generate more fee-based revenue is the right strategy long-term because it will make the bank less hostage to the bond market yield curve. These investments paid off in a big way Tuesday. From a banking point of view, Wells was the big winner of the two multi-billion deals announced. It advised Union Pacific on its $85 billion acquisition of Norfolk Southern , and it advised Chart Industries on its $13.6 billion sale to Baker Hughes . According to data compiled by Bloomberg, Wells Fargo is fifth for deal advice globally this year. At this point last year, Wells Fargo wasn’t in the top 10. From this sale, we will realize a big gain of about 158% on stock purchased in January 2021. (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.
