During the September Monthly Meeting , we took questions directly from Investing Club members. Here are Jim Cramer’s and portfolio director Jeff Marks’ responses. Their answers have been edited for clarity. 1. Can you explain the buying strategy for initiating a position? Please use Broadcom as an example. Initial purchase 33 shares @ $865. Then subsequent purchases of 17 shares at $886 and 17 shares at $870. I am trying to understand the rules to follow. (Rob, Canada) Jeff Marks: When we start a new position, we usually buy between 0.5% to 1% of the total portfolio. From there, we look to buy on weakness in increments. We broke the rules with a buy near its all-time highs and ahead of a quarterly report, but the stock was getting crushed despite a good earnings report . There are rules and then there are exceptions to the rules. Sometimes we will violate cost basis if there is an incoming catalyst. We try to wait for a 3% to 5% move and keep buying down because as positive as you could be around a stock, sometimes the market has its own plans and you have to respect that. Jim Cramer: If you can get in this before Broadcom ‘s (AVGO) purchase of enterprise software company VMWare (VMW), I think it’s going to be terrific. 2. You have said on several occasions to not sell a stock all at once but to sell in increments. Can you explain the decision to sell all of your Johnson & Johnson stock at once? (Mel, Pennsylvania) Jim Cramer: When you have plaintiff’s bar against you and the word asbestos comes up, I forever think of Johns Manville asbestos case, a situation where the bar never let up until it sunk the company. Despite Johnson & Johnson ‘s (JNJ) AAA balance sheet the company is plagued by the pro-plaintiff bench in its talc litigation. Jeff Marks: We knew the stock was up for artificial reasons due to the exchange offer with the recently split-off Kenvue (KVUE). Arbitrageurs were going long J & J and short Kenvue because of the discount shareholders received if they participated in the deal. There was also bad news around J & J. The bankruptcy court for the district of New Jersey dismissed the company’s bankruptcy plan to resolve the tens of thousands of talc-related lawsuits. 3. Given the activist investor involvement in Constellation Brands, how long do you wait for a stock price impact? (Greg) Jim Cramer: Liquor is a challenged category. There’s been a drop in drinking in the U.S. but not for the beers and the one beer that has experienced growth is Constellation ‘s (STZ) Modelo Especial. We’re also encouraged by Elliott Management’s big stake in the company because the activist firm will demand changes to be made that should benefit the long-term growth of the company. We’re also looking for the company to dispose of its underperforming wine and spirits business. STZ’s cash flow is incredible. Jeff Marks: The upcoming earnings report should be good considering how strong the beer business is doing. But what we don’t know yet is how STZ is thinking about the company one year plus into the improved corporate governance structure. I’d bet activist firm Elliott Management has plans for STZ that they’ve shared with management. I think the Nov. 2 analyst day is key. 4. I have seen some upward movement in Morgan Stanley lately. What are the prospects for this stock for the remainder of 2023 and into 2024? (Carey, Virginia) Jeff Marks: I think the prospects are for a better 2024 considering how bad the past two years have been for deals and IPOs. And we’ve heard the company say as much on previous earnings calls and conferences. Starting to see some bigger acquisitions announced — case in point Cisco (CSCO) buying Splunk (SPLK). Jim Cramer: Morgan Stanley (MS) stock is stuck, but it’s going to come back once the company finds a new CEO. That’s why James Gorman who plans on stepping down within the next 12 months, needs to find a successor. The stock, which has gotten cheaper as of late, could go higher as the IPO market continues to heat up with more deal-making. 5. Hi Jim, I am a veteran, and very grateful for the Club! I just started a position recently in Estee Lauder and wonder if it is time to buy more? (Greg, Canada) Jeff Marks: If you haven’t bought around here, then yes buy a little like we have . But if you have already then you can wait and be patient. Estee Lauder (EL) needs time. Time for the inventories in the Asia travel retail business to normalize — the recovery will take another quarter or two before it gets back on track. Jim Cramer: Estee Lauder CEO Fabrizio Freda was adamant that this quarter wouldn’t be any good so everyone is selling it. Elf Beauty (ELF) has been down too — the group is tough to own. If you know the quarter is bad and the stock is down roughly 3% then you have to start thinking, it includes the bad quarter. This was one of the greatest companies of all time. Fabrizio Freda has been one of the greatest CEOs of all time — and he will come up with something. 6. How would the market react to a hack impacting a Palo Alto Networks customer? (Kyle, Wisconsin) Jeff Marks: Since there’s been a lot of hacks recently, I think negative at first but the market will quickly forget as hacks tend to happen. But as long as there are no major legal risks or major reputational risks associated with the hacks; it will be fine. Jim Cramer: Palo Alto Networks (PANW) is the gold standard in cybersecurity. It is the protector against hackers. Demand for data protection and theft protection is a key trend and the best way to play it is through PANW. 7. I like to hear your opinion on Honeywell. I’d like to start a position but wanted to get your thoughts on a good entry point. (Omar, Colorado) Jim Cramer: We bought Honeywell (HON) stock all the way down in the $180s because we know that the company has a history of giving a new CEO, whether it be Dave Cote or Darius Adamczyk or now Vimal Kapur a clean whiteboard to do what he wants and a blank check to get it done. In the last years of Darius’ regime, there was a lot of money spent on quantum computing and new types of materials. That means there’s a lot of low-hanging unprofitable fruit to prune. Or the company can find a way to be more tech-oriented as long as it doesn’t turn out to be another warehouse automation hit-and-miss. I want to see what happens here. The stock tells me it is going to be something big. Jeff Marks: The stock has been a dog this year but finally showing signs of life after the new CEO Vimal Kapur spoke at the Morgan Stanley Laguna conference. The key focus for him: “How do we rejuvenate the portfolio.” His three priorities are rejuvenation, simplification, and accelerated growth. Honeywell needs rejuvenation because even though its aerospace business has been great, the rest of the business hasn’t been as strong and the stock has lagged industrial peers. 8. You continue to tout GE Healthcare, but the stock continues to fall. Any understanding of the divergence between its market price and your view of the company’s outlook? What might pull the stock higher? (Rob, ?) Jim Cramer: I think we just have to wait for people to realize that doctors are going to be able to have precision on what to do with surgery and the stock is going to reverse. There’s nothing fundamental going on, it’s just sellers continue to weigh on the stock. Jeff Marks: I think it will be on earnings reports and the company showing it has good growth and strong orders — much like it did last quarter even though the stock didn’t get any credit for it. Very frustrated by the price action, but you know who else must be? GE Healthcare (GEHC) — otherwise they probably would’ve sold a slog of shares again. Their waiting is a sign that they too believe the stock is undervalued. Still believe in the Alzheimer’s opportunity and trying to understand better how this really is a stealth AI play as well. 9. What is your current position on the oil stocks, as well as in the future? (Ronald) Jim Cramer: There is no pressure that could pull oil down with the Saudi Arabia oil cuts and Russia export cuts. That means we’re in favor of owning more Pioneer Natural Resources (PXD). We did just that after the Monthly Meeting as we said we were going to do . Jeff Marks: These oil stocks have become great hedges to inflation again, much like they were last year. We started the year with four, took our gains in Devon Energy (DVN) a long time ago — and more recently, booked profits in Halliburton (HAL). Now, down to Pioneer, which is one of the best operators in the Permian. Also, Coterra (CTRA), which was one of the first to pivot towards buybacks instead of variable dividends. With the stock up about 16% year-to-date that looks to be a great move for shareholders. 10. With Costco being a very large position in my portfolio, is it time to take some off the table or continue to ride it out? (Rick) Jim Cramer: You do not want to sell Costco. One of the easier positions to own right now. Only a few retailers will be left when the Fed tightening cycle is over and that’s Costco (COST), Walmart (WMT) and Amazon (AMZN). One of them is COST. Still looking for an increase in membership fees and the special dividend, which history says is overdue. Their private label Kirkland brand is popular among shoppers. Jeff Marks: I would continue to ride it out. We’ve talked before that this is as close as you’ll get to “own it, don’t trade it” in retail. Fantastic membership model — gaining share not only from more members, but also existing members spending more in the stores. (Jim Cramer’s Charitable Trust is long AVGO, STZ, PANW, EL MS, HON, GEHC, COST, AMZN, PXD, CTRA. 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.
During the September Monthly Meeting, we took questions directly from Investing Club members. Here are Jim Cramer’s and portfolio director Jeff Marks’ responses. Their answers have been edited for clarity.
