Shortly after the opening bell, we will be exiting our position in Johnson & Johnson (JNJ), selling 500 shares at roughly $171 each. Following Monday’s trade, Jim Cramer’s Charitable Trust will no longer own a position in J & J. We are making the tough decision to exit our J & J position after the U.S. Bankruptcy Court for the District of New Jersey dismissed the bankruptcy plan of the company’s subsidiary LTL Management. It’s the second time this year that J & J’s plan to use bankruptcy to resolve tens of thousands of lawsuits alleging its talc products caused cancer was rejected. LTL was created by J & J to silo the talc litigation. After Johnson & Johnson lost an important talc trial in California a few weeks ago, we’ve been pessimistic about the company’s legal strategy, and the news late Friday represented yet another setback in its plan. In April, the company said it would pay $8.9 billion over the next 25 years to settle all its claims but the bankruptcy court’s rejection likely means that number will have to go much higher. How much more will Johnson & Johnson have to pay? Hard to say. But unfortunately, this uncertainty could limit J & J’s upside from here. Outstanding legal risk has a habit of causing rallies to be sold, effectively putting lids on stock prices. JNJ YTD mountain J & J year to date performance The stock has had a nice move lately after a good quarter and anticipation of the Kenvue split-off , and we do not want to give those hard-fought gains back because of a longstanding legal issue. With no resolution in sight, we are moving on from the position. Based on the current premarket price of $171 per share, we’ll realize a small gain on this sale. On the bright side, Monday’s exit will free up some space in the portfolio for a new name. So we are taking a hard look at the Bullpen and the rest of the market for new opportunities. The market is currently overbought according to the S & P Oscillator , but we have plenty of cash sitting on the sidelines, waiting to be put to work in quality companies. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of the stocks.) Every time we mention the Oscillator, we’re flooded with requests from Club members: “How can we access?” Well, we went directly to the source, our partners at MarketEdge, the data provider that publishes the Oscillator. We’re excited to share that Club members can now get an exclusive discount for this helpful tool. Click here . 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.
We’re exiting a health-care name — putting us on the hunt to buy a new stock for the portfolio
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, July 19, 2023.
Brendan McDermid | Reuters
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