We’re selling 50 shares of Humana (HUM) at roughly $467.69 each. Following Wednesday’s trade, the portfolio will own 195 shares of HUM — decreasing its weighting to 3.33% from 4.15%. Our trim is not a call on Humana or our investment thesis. We continue to believe this profitable, economic-slowdown resistant, reasonably valued health insurer is the type of stock we want to own when the Federal Reserve is hiking interest rates to slow down the economy and combat inflation. However, Humana has been a solid outperformer for us recently. Given the large size of this position in our portfolio, we believe the stock’s strong move in a rough market represents an opportunity to book some profits. Of course, the small gain of about 1% we will realize on this first sale since we initiated the position back in April is nothing to write home about. But like we always say, you can’t go broke taking a profit. Context matters too: The S & P 500 has fallen about 14% over the same period — making this a winning trade in our view. While we are long-term investors and not traders, we averaged down and bought Humana a handful of times when the stock sold off to position ourselves for a sale into a rebound. With shares higher and pressing up near its 52-week high, which happened to have been made Tuesday at $477.44, we’re making a sale one day later and downgrading our rating on the stock to a 2, meaning we want to see a pullback before buying . Wednesday’s trim will change our average cost basis positively — but more importantly, the cash raised from this sale will provide us with more flexibility and protection in the event the market takes a leg lower. Remember, we took our cash position down to uncomfortably low levels when the market became its most oversold per the S & P Oscillator , so now our discipline states it’s time to look for areas of strength to lighten up into to rebuild cash. We may be taking some Humana shares off the table, but we still like this name for the long term and believe in the company’s ability to reaccelerate Medicare Advantage growth without sacrificing margins (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.
