We're trimming our position in this biotech and adding to our stake in a life-sciences name

Published Wed, Apr 13 202211:50 AM EDT

We're selling 100 shares of AbbVie (ABBV) at roughly $158.59 per share. Following Wednesday's trade, we'll own 365 shares of biopharmaceutical company, decreasing its weighting to 1.81% from 2.29% in the Charitable Trust portfolio. We will use some of those funds to buy 35 shares of Danaher (DHR) at roughly $280.67 per share. After this purchase, we'll own 500 shares of the health-care technology company, increasing its weighting to 4.28% from 3.99% in the portfolio. AbbVie We want to use the recent strength in shares of AbbVie to book some profits in what has been an incredible winner for the Trust. While we are not selling at the top, by selling now we are still able to realize a price right around our prior sale on March 18, our highest to date (though we were targeting a higher sale price at the time the decision was made to take action). As we noted previously, when we bought AbbVie we were locking in a dividend yield north of 5%. But with the rise in the stock price, that yield has diminished somewhat; it's still a very respectable 3.4%, but doesn't offer the same downside support it once did. Income-oriented investors may now start finding competitive sources of income in other instruments as interest rates rise. We will realize a gain of roughly 131% on shares purchases in March and April of 2020. Danaher We're adding to our position in Danaher as a buy at these levels serves to reduce our overall cost basis. While shares have come under pressure in recent weeks, we remain focused on the fundamentals as prior quarterly earnings results were strong. Danaher notched its 30th consecutive year of exceeding a 100% cash conversion on net income and provided solid forward guidance. The recent weakness combined with the positive forward guidance has resulted in shares falling to a valuation not seen since before the pandemic and a growth adjusted valuation (based on the "PEG" ratio) not seen since the middle of 2016. Put another way: we are paying less for growth now than we would have been able to over the past 6 years. These two ways of viewing the valuation , through an absolute price-to-earnings lens and a growth-adjusted one causes us to believe that the sellers have simply overshot to the downside and that a buy here will ultimately prove to be a bargain. One final thing to note, with these actions, we will be pulling a little bit of cash out of the market. While we like to put cash to work when volatility strikes, we are fine with the slight raise as earnings season gets underway. The added funds will allow us to take advantage of opportunities that may arise from volatility. (Jim Cramer's Charitable Trust is long ABBV. 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.

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