We're bulking up on this health insurance stock that we added recently from our watch list

Published Thu, Apr 21 202211:37 AM EDTUpdated Thu, Apr 21 202212:35 PM EDT

We're buying 75 shares of Humana (HUM) at roughly $463.15 each. Following Thursday's trade, the portfolio will own 150 shares of HUM, increasing its weighting in the portfolio to about 2.09% from 1.04%. We're making our next buy on a modest down day for Humana, a health insurance company that largely makes money through Medicare plans sold to retail customers. We called up this stock from our Bullpen earlier this week , on the belief that the company can get its Medicare Advantage business growth back on track through better execution and support from its $1 billion value creation plan. Shares were trading lower Thursday morning alongside many health-care names. We think this move is all about sector rotation. Following a strong earnings report from Tesla and the fabulous outlooks from the airlines, investors were swapping out some defensive areas like health care and buying up discretionary and cyclical stocks. We like buying stocks of quality companies when they go temporarily out of favor, so we view Thursday's weakness as a logical time to scale deeper into this position. Also Thursday, Humana announced strategic action that we see as a positive. The company said it signed a definitive agreement to divest a majority interest in the Hospice and Personal Care divisions of Humana's Kindred at Home subsidiary. The news isn't a complete surprise as the company had previously indicated its intent to divest a majority stake in these non-core businesses when it acquired Kindred at Home in April of last year. But we like the move nonetheless, because the $2.8 billion in cash proceeds Humana will get from the transaction will go towards debt reduction and share repurchases. (Jim Cramer's Charitable Trust is long HUM. 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.

Morsa Images | DigitalVision | Getty Images