We're exiting our smallest position and will use the cash to buy more of another stock

Published Thu, Nov 2 202312:15 PM EDT

We're exiting our position in Veralto (VLTO), selling 173 shares at roughly $69 each. Following Thursday's trade, Jim Cramer's Charitable Trust will no longer own a position in VLTO. These shares were received as part of its spinoff from Danaher on Oct. 2. Once again, the S & P Short Range Oscillator was a great predictor of an impending oversold bounce. Stocks on Thursday were pushing higher for the fourth straight session with bond yields retreating as investors weigh whether the Federal Reserve is finished with its interest rate hiking cycle. Since we've been buyers recently, including two separate trades Wednesday of GE Healthcare (GEHC) after its strong quarter and Oracle (ORCL) on strong cloud checks , we want to take advantage of the recent market strength and make a small sale to balance out our cash position. When we scrutinized the portfolio up and down on what to sell, we decided to move on from our smallest position, the "stub" we received from the Danaher spinoff last month. Veralto , the water and packaging quality company, has some interesting long-term prospects as a standalone company that may be worth revisiting down the road. However, Veralto is currently experiencing headwinds due to weakness in China for water quality and lower demand for consumer packaged goods. More specifically, Veralto's water quality sales in China in the third quarter fell in the high teens on a percentage basis. This challenge is similar to what we heard Wednesday from DuPont (DD), which saw its water quality sales fall by mid-single-digits due to inventory destocking in China. Given the overlap of these two positions and the challenges that lie ahead, the question we must ask ourselves is do we ride out both cycles and hope for a quick turn, or do we consolidate this China exposure and stick with the company that is about to see a huge uplift in growth in its other businesses. When there's uncertainty like that, we believe it's best to do the latter because we don't know if the weakness will last one quarter or persist a little longer. At least with DuPont, its Electronics and industrial business is on the cusp of a big turnaround as the semiconductor and electronics industry recovers. DuPont makes materials and coatings for this industry. Therefore, we are moving on from Veralto on Thursday afternoon to raise some extra cash and we'll earmark these funds for DuPont when we are not restricted from trading that name. As we said Wednesday, we thought the third quarter earnings selloff in DuPont was too severe for a company that is seeing a bottom in its key business. (Jim Cramer's Charitable Trust is long DHR, DD, GEHC, ORCL. 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.

The Wall Street sign is pictured at the New York Stock Exchange on March 9, 2020.

Carlo Allegri | Reuters