We're trimming a disappointing stock to raise cash for better opportunities elsewhere
We are selling 300 shares of Bristol Myers Squibb at roughly $47.66. Following the trade, Jim Cramer’s Charitable Trust will own 1,400 shares of BMY, decreasing its weighting to about 1.75% from about 2.15%. Bristol Myers Squibb shares are up roughly 8% over the past two trading sessions, part of a significant relief rally in large-cap drug stocks. The catalyst was a deal between pharma peer Pfizer and the Trump administration that covers most-favored nation drug pricing, domestic manufacturing, and an exemption from pharmaceutical-specific tariffs for a period of three years. Other companies are expected to use the framework of Pfizer’s agreement as a blueprint for more deals. The news was a relief for drug-stock investors because the group had been capped by two significant overhangs — drug pricing policy proposals and tariffs — that threatened earnings. But, as the terms of the deal were announced, the market quickly realized Pfizer’s impact from most-favored nation pricing is expected to be immaterial, and the three-year grace period on tariffs gives the company time to stand up its new domestic manufacturing plants. We’re taking advantage of this recent strength to trim our position in Bristol Myers at a disappointing loss of about 20% on stock purchased in November 2024. We prefer to trim Bristol Myers over our other drugmaker in Eli Lilly because Bristol Myers is more of a show-me story that hinges on successful trials of Cobenfy, its new schizophrenia treatment. As we unfortunately saw earlier this year, drug trials are never guaranteed to be successful, which makes this trim serve as a hedge in case forthcoming studies do not live up to expectations. Additionally, Eli Lilly should be quicker to strike a deal because its long-standing manufacturing push in the U.S. has the company in good standing with the Trump administration. We also remain bullish on next year’s launch of its oral GLP-1 orforgliporn. Finally, this sale helps rebuild our cash position, which we’ve used up over the past few weeks while scaling into new names like Boeing and Nike . The outlook for Boeing and Nike are much stronger than Bristol Myers. In effect, this sale Wednesday allows us to raise cash from a losing position that we can redirect into what we believe will be two winners. Earlier Wednesday, we added to our Nike stake after its earnings report reinforced our conviction in the apparel giant’s turnaround plan. (Jim Cramer’s Charitable Trust is long BMY, LLY, BA and NKE. 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.
