Shortly after the opening bell, we will be selling 420 shares of Wells Fargo , at roughly $51.75 each. Following the trade, Jim Cramer’s Charitable Trust will own 2,670 shares of Wells Fargo, decreasing its weighing to 4.25% from 4.93%. Wells Fargo shares jumped roughly 8% last week to a new 52-week high after the bank said the Office of the Comptroller of the Currency terminated a 2016 consent order linked to its sales practice misconduct. There are eight consent orders still outstanding, CNBC reported last week, but this was an important one for Wells Fargo to get done because the issues tied to the consent order were a reason why the Federal Reserve put an asset cap on the bank in 2018. The end of the 2016 consent order is a clear-cut win for Wells Fargo. The sooner the bank can get the asset cap lifted, the greater confidence investors will have in management’s ability to drive a sustained 15% return on tangible common equity. The stronger a return Wells can generate, the higher the multiple investors will be paying for the stock. WFC 1Y mountain Wells Fargo 1 year We are pleased to see Wells Fargo take a big step toward getting past the legacy regulatory issues, which CEO Charlie Scharf has worked to fix since taking over in 2019. However, portfolio management reasons are why we are trimming into this recent strength, locking in gains of about 54% on stock purchased in January 2021. Due to its recent outperformance, our Wells Fargo position size has swelled to the largest in the portfolio at nearly 5%. For a bank whose stock tends to rally in fits and starts and continues to deal with an overhang from its commercial real estate exposure, we think it’s prudent to right-size the position and open up some room to buy in case the stock falls back to the mid $40-per-share range. Accordingly, we are downgrading our rating to a 2 . (Jim Cramer’s Charitable Trust is long WFC. 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.
