We’re selling some bank shares and buying some more beer stock

The Morgan Stanley trim will right-size our position, which had grown to an over 5% weighting due, in part, to its spectacular run higher for the past month. We are also downgrading the stock to a 2 rating, which is also a reflection of its recent strength and not any change in our long-term view. We still very much believe in Morgan Stanley going forward. This sale will lock in a small gain of about 1% on stock purchased in July 2021.

Following our consistent buying of Morgan Stanley in the spring to early summer in the low $80s and the stock’s outperformance over the past month — up nearly 18% versus 10% for the S&P 500 — our position in Morgan Stanley had swelled to the second largest in the portfolio. Although we are rightsizing this position following Thursday and Friday’s strength, we continue to like shares of this investment bank and asset gather for its push into fee base revenues, an eventual resurgence in IPO market, and its steady dividend and buyback programs.

We’re taking the Morgan Stanley funds and redeploying them into Constellation Brands on a nearly dollar-for-dollar basis. This was a milestone week for the Corona beer maker as it received enough shareholder votes at a special meeting to execute its plan to remove its dual-class share structure. We wrote all about the event Thursday, explaining why this is great news from a corporate governance standpoint and should lead to a more shareholder-friendly capital allocation policy. We anticipate less expensive and unprofitable acquisitions, greater investment in the growth of the beer portfolio, and more share repurchase.

If Constellation allocates its capital in this fashion, we think the stock’s price-to-earnings multiple will expand over time. But with shares down a bit Friday — more so when we mentioned the buy on the “Morning Meeting” — some may wonder if this decline is an indictment on Constellation’s decision to pay a premium to remove the super-voting Class B shares. We do not think that is the case and think STZ is getting swept up in this sector rotation move out of defensives. Given our propensity to buy strength and sell weakness, we are adding to our STZ position.

(Jim Cramer’s Charitable Trust is long MS and STZ. 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.

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