Right after the opening bell on Tuesday, we’ll make a trio of trades: We’ll sell 200 shares of Coterra Energy at about $29.31. After the trade, the Jim Cramer Charitable Trust will own 3,100 shares of CTRA, reducing its stake from 2.7% to 2.55%. In addition, we will sell 45 shares of Honeywell at $224.26. Following the trade, the Trust will own 200 HON shares, reducing its stake to 1.25% from around 1.5%. Finally, we will buy 10 shares of Eli Lilly at about $727.50. Following the acquisition, the Trust will own 115 shares of LLY, increasing its stake to approximately 2.3% from approximately 2.15%. Now that we are no longer restricted, we are shorting our Coterra Energy position. We indicated on Friday that we would have made this sale if not for our restrictions, which were in place because Jim mentioned the stock within the last 72 hours on CNBC. Shares of the oil and gas producer are off to a great start to 2025, rising 15.4% on strength in the basic commodities. The move has turned this position from a loss to a gain, and after battling Coterra for so long, we don’t want to reverse those gains. We will realize a small 1% gain on shares purchased in April 2022. We are also trimming our position in Honeywell. Although we’re encouraged by the changes coming at Honeywell — with the company largely expected to announce a split on February 6 along with fourth-quarter results — we’re selling our position for two reasons. The first reason is our ongoing concerns about Honeywell’s fundamentals. When the company reports earnings, we think it’s likely that 2025 sales and earnings guidance will miss consensus estimates due to the slow recovery in its short-cycle businesses. The second reason is concern about “spin purgatory”. Since the news of the breakup is so telegraphed, the announcement is mostly priced. However, it could take a year to complete the split, creating a risk that investors will lose interest in the stock until closer to the completion date. We’ve seen this play out with the DuPont split, even though the club’s shares trade at a significant discount to the sum of the parts. To hedge against the risk of Honeywell stock being stuck in spin purgatory, we’re reducing the position. We will realize a gain of about 19% on the shares we bought in 2022. And finally, we are adding to our position in Eli Lilly. The drugmaker’s shares took a hit last week after the company warned of soft fourth-quarter earnings, which were entirely due to slower growth in its GLP-1 drugs Mounjaro and Zepbound. Although the company guided for better-than-expected earnings for 2025, the market focused on the quarterly shortfall – “Eli Lilly’s second in a row” and worried that the obesity market may not be as big as previously thought. seen. We disagree with this view and point to the billions of dollars that Lilly is investing in manufacturing as a sign of confidence in the market’s long-term opportunity. (Jim Cramer’s Charitable Trust is long CTRA, HON and LLY. See here for a complete list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable trust portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY ALONG WITH OUR STATEMENT. NO OBLIGATION OR FIDUCIARY DUTIES EXIST, OR ARE CREATED BY VIRTUE OF YOUR RECEIVING ANY INFORMATION DIRECTED IN CONNECTION WITH THE INVESTOR CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
