We're booking profits in our largest position. Our discipline calls for another sale

Published Mon, Apr 29 202412:15 PM EDTUpdated Mon, Apr 29 202412:42 PM EDT

We are selling 560 shares of Wells Fargo at roughly $60 each. Following the trade, Jim Cramer's Charitable Trust will own 2,110 shares of WFC, decreasing its weighting to roughly 4.0% from 5.08%. We always say discipline trumps conviction. No matter how strong a company's outlook may be, it's important to take some gains along the way, especially when encountering the high-quality problem of a stock becoming too big of a position due to outperformance. Our general rule of thumb is that when one of our positions gets to a weighting of around 5%, we ring the register and lock in gains to prevent ourselves from becoming too greedy. That's what we are doing Monday with Wells Fargo. We stayed disciplined in mid-March when Meta Platforms — trading at roughly $490 per share at the time of the sale — reached about 5% of the portfolio. This is a great example of how our discipline saved us. With Meta Platforms now trading 11% below that sale after reporting disappointing revenue guidance and higher artificial intelligence-related spending last week, we could look to buy back what we sold at lower prices. We also exercised discipline at the start of April with Disney when it reached 5% of the portfolio. At the time of the sale , shares of Disney traded around $122 each. It was a timely trim near their 52-week high. The stock has fallen about 8% since the trade. Not every example will work out so perfectly. We did this exercise once already this year with Wells Fargo after its weighting neared 5% in late February. That trim locked in gains at about $52 per share. But with shares of the bank now sitting around $60 after a delayed reaction to good earnings , the stock's outperformance in a volatile market has put its weighting back to 5%. This sale doesn't reflect a change to our Wells Fargo thesis, which is why the trade should be viewed as position resizing and not us making a call on where the stock goes in the near term. CEO Charlie Scharf has done an exceptional job putting to rest many of the bank's legacy regulatory issues. There's more to come here , but we are pleased with the progress to date. Management also has successfully cut costs while investing in technology and building up a capital markets business. But with the stock pressing near our $62 price target, our discipline calls for booking some profits. We'll realize an average gain of about 78% on stock purchased in January 2021. (Jim Cramer's Charitable Trust is long WFC, META and DIS. 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.