(This article was sent first to members of the CNBC Investing Club with Jim Cramer. To get the real-time updates in your inbox, subscribe here.)
After you receive this email, we will be selling 50 shares of Advanced Micro Devices (AMD) at roughly $160.20. Following the trade, the Charitable Trust will own 700 shares of AMD. Our trim in AMD will decrease its weighting in the portfolio from about 2.93% to about 2.74%.
We are trimming AMD this morning solely for portfolio management purposes and not out of any change to our bullish long-term view of the company. The markets may be volatile right now, but AMD has stood out as one of the better relative performers.
Our patience has been rewarded
We've been big believers in Advanced Micro Devices all year and stuck by this semiconductor through thick and thin. We added to our position back in February when the stock sold off on unfounded competitive concerns with Intel (who AMD is now closing in on from a market cap perspective) and even more in the months that followed as tech stocks became out of favor. Our patience has since been rewarded, with the gains on those buys ranging from the high 70% to 100%. We don't want to give these outsized gains back, and we will realize a gain of about 80% on stock we purchased in early February.
Lastly, we have been steady buyers recently and have put a solid amount of capital to work over the past couple of weeks as certain stocks moved lower. A small trim of AMD near its highs will help us replenish our cash balance and allow us to continue to look for opportunities in beaten down stocks, like Mastercard (MA) which we would buy today if we were not restricted.
As a reminder, we cannot buy the stock today because we are restricted from trading any stock that Jim mentions on TV for three full days following the mention. Although we cannot make the trade for the Charitable Trust, our restrictions will never prevent us from telling the Investing Club what we would buy or sell and when we would do it.
Buy now, pay later disruption overblown?
We saw another data point this morning from a Wall Street Journal article that suggested the disruption of credit card companies at the hands of buy now, pay later outfits has been overblown. The article noted that nearly 27% of U.S. consumers said in October they had applied for a credit card in the past 12 months, citing the Federal Reserve Bank of New York. That's a new pandemic high.
Mastercard also made two announcements last night that should go over well with investors. Not only did they increase the dividend by 11%, but the Board also approved a new share repurchase program of up to $8 billion that will become effective after the completion of the current authorization that has $4.4 billion remaining. We view the buyback news as a sign that management recognizes how cheap the stock has become relative to the fundamentals and the strong 2022-2024 outlook they provided at their recent Investor Day.
The omicron variant may have created some uncertainty in the near-term recovery of cross-border spending, but we do not see it as a long-term issue and that's what makes the recent sell-off a buying opportunity.
The CNBC Investing Club is now the official home to my Charitable Trust. It's the place where you can see every move we make for the portfolio and get my market insight before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Typically, Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If the trade alert is sent pre-market, Jim waits 5 minutes after the market opens before executing the trade. If the trade alert is issued with less than 45 minutes in the trading day, Jim executes the trade 5 minutes before the market closes. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. See here for the investing disclaimer.
(Jim Cramer's Charitable Trust is long AMD, MA.)