Investing Club: We're cutting our large position in Apple — here's why

Published Mon, Apr 11 20222:56 PM EDTUpdated Wed, Apr 13 202212:26 PM EDT

We are selling 350 shares of Apple (AAPL) at $166.89 per share. Following the trade, the portfolio will own 975 shares of Apple, decreasing its weighting in the portfolio to 5.06% from 6.75%. Our trim today is in line with what we said last week in our April Monthly Meeting , where we discussed the need to right-size this position the next time we had a chance, meaning when we are not restricted. Thanks to Apple's recent run, we now believe we are too big in the stock. It is by far our largest position at 6.75% before this trade — no other position is appreciably above 5%. And while we stand by our desire to own Apple and not trade it, we have to make it more manageable. Any time a position is above 6% of our portfolio, we typically like to trim it back and reduce its weighting so that on any given day, the portfolio's movement is not directly tied to one individual stock. At 26 times forward earnings, even Apple has gotten a little expensive for our taste after its most recent run. That's especially true given uncertain expectations around smartphone demand in China amid the lockdowns and lowered-than-expected estimates for App Store net revenue growth in the quarter ended in March. Put simply, we don't want to be the Apple fund when high multiple stocks are going to be problematic. In addition to our sale, we are downgrading our rating to 2 . We will wait for a more opportunistic entry point to upgrade our rating again. This trade will lock in a massive gain of approximate 733% on stock purchased in December 2013. (Jim Cramer's Charitable Trust is long AAPL. 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.

Customers walk past a digital display of the new green color Apple iPhone 13 pro inside the Apple Store on 5th Avenue in Manhattan, in New York, March 18, 2022.

Mike Segar | Reuters