Cramer Trust Sells Broadcom, Capital One Shares to Trim AI and Credit Risk

After the trades, the trust’s Broadcom stake fell to 120 shares and its portfolio weighting dropped to 1% from 1.36%. Its Capital One stake fell to 600 shares and its weighting declined to 3.1% from about 3.45%. The trust described the Broadcom sale as a small trim of its AI exposure following the group’s modest rebound over the past two sessions.

The CNBC report said the trust may not be selling Broadcom at the same high levels as at other times this year, but it believes it is never too late to lock in more of its large profits. The trust framed the move as protecting against downside as AI stocks come under pressure from the rising cost of capital, a risk Broadcom CEO Hock Tan acknowledged last week. The same approach protected the trust when it exited Arm Holdings around $300 in early July and Corning in the mid-$140s last month, according to the report. Arm has fallen about 23% from the trust’s exit price, while Corning’s recent slide puts it about 7% below where the trust sold its last shares.

From the Broadcom sale, the trust will realize a gain of 312% on stock purchased in August 2023.

The Capital One sale came ahead of the bank’s earnings after the closing bell. The trust also downgraded the stock to its hold-equivalent 2 rating. It said the sale did not represent a call on Tuesday evening’s earnings report, but reflected some disappointment with how front-loaded investments to unlock growth from Capital One’s Discover and Brex acquisitions have been, which have limited outsized profit beats.

The trust added that it has been increasing financial exposure lately through several purchases of Bank of New York, which does not have the same credit exposure and sensitivity to high oil prices and inflation as Capital One. The CNBC report noted that Jim Cramer’s Charitable Trust is long AVGO and COF.