Sell 205 shares of Palo Alto Networks for approximately $183.32 and buy 30 shares of Honeywell for approximately $210.68. After the transaction, the Jim Cramer Charitable Trust will own 245 shares of PANW stock, reducing its weight in the portfolio from approximately 2.20% to 1.2%. Additionally, the company will hold 420 shares of HON stock, increasing its weight in the portfolio from 2.20% to 2.35%. Top-tier cybersecurity stocks CrowdStrike and Palo Alto Networks continue to rebound from sharp declines earlier this year. The market is finally beginning to see that artificial intelligence is accelerating, not disrupting, business. Palo Alto Networks’ stock price was down 23% as of February 24th, but is now roughly flat. With the stock price back in the $180 range, we are executing on our previously stated intent to strengthen and consolidate our cybersecurity exposure around CrowdStrike. This is not a blow to Palo Alto. The company remains a top name in the industry and is led by a deep-pocketed CEO in Nikesh Arora who has successfully positioned the business for the AI era. Rather, it reflects a portfolio management discipline. We have two cybersecurity stocks in our 32-stock portfolio. Rightly or wrongly, when the market becomes concerned about software, this group tends to sell. This adjustment reduces exposure to downdrafts. This sale will result in an average gain of approximately 70% on the shares purchased in 2023 and 2024. The company is using some of that cash to buy Honeywell stock to take advantage of the recent decline in stock prices. The stock price has fallen about 9% over the past week, from $233.55 to $213.17, and we are picking up the stock on this weakness. Honeywell had a slightly weaker quarter as the Middle East conflict delayed shipments and supply chain logjams hurt aerospace sales. Honeywell wasn’t the only aerospace company to suffer from poor performance. GE Aerospace and RTX also pulled out due to concerns that high oil prices and jet fuel shortages related to the Iran war would hurt aftermarket demand in the civil aerospace industry. We view all of these short-term concerns as an opportunity to add to our position and buy back the stocks we sold at high prices earlier this year. The main part of our paper is based on the value creation of the separation of Honeywell Aerospace Corporation into two publicly traded companies. The “spin purgatory” has made this stock frustrating to own, but Honeywell is about to come through the other side. The breakup should receive more attention in June, when the company hosts Honeywell Aerospace and Honeywell Automation’s investor days. It culminates in an aerospace spinoff on June 29th. Correction: This article has been updated to reflect that the club realized an average return of approximately 70% on the PANW shares purchased in 2023 and 2024. In previous versions, that percentage was underestimated. (Jim Cramer’s Charitable Trust is long PANW, HON, CRWD. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
