TJX weight drops to 1.8% after Cramer trust cuts 475 shares

Jim Cramer's Charitable Trust reduced its exposure to TJX Companies on Friday by selling 475 shares at a price of approximately $135. The move leaves the trust holding 500 shares of the retailer, cutting the company's weighting in the portfolio to roughly 1.8% from 3.4%. The sale follows a downgrade from analysts who cited competitive pressures and execution issues at TJX's largest segment.

The trust is redeploying the funds from the TJX sale into two other consumer stocks. It purchased 300 shares of Kimberly-Clark at about $108 each. This buy increases the trust's holding in Kimberly-Clark to 900 shares and raises its weighting to about 2.5% from 1.65%. Additionally, the trust bought 220 shares of Constellation Brands at roughly $145 per share. This purchase lifts the Constellation Brands position to 490 shares, increasing its weighting to 1.8% from 1%.

The decision to trim TJX stems from a report released Friday by Gordon Haskett. The firm downgraded TJX shares to hold with a price target of $130. Haskett pointed to continued competitive pressure from Ross Stores and lingering execution problems at Marmaxx, the segment that houses TJ Maxx and Marshalls chains. These issues weighed on the segment's results in the second quarter.

Cramer's team originally bought TJX stock multiple times in September as the price slid from $140 into the $120s. At that time, they believed the market was overreacting to a rare execution stumble at a well-managed company. The trust sold most of those shares in mid-October when the stock rebounded to around $145. The team stated at that time that it believed TJX had quickly resolved its internal issues.

New analysis from Haskett suggests that traffic trends at co-located Ross Stores and Marmaxx locations continue to favor Ross. The report also indicates that the market share gains Marmaxx had previously taken from Target may be leveling off due to improvements at Target. While this represents one analyst's view, the trust aims to avoid holding too much TJX stock ahead of earnings reports.

The sale of TJX shares realizes an average gain of about 113% on positions bought in August 2022 and March 2023. The trust views the current market valuation of Kimberly-Clark as an underappreciation of its ability to turn around the Kenvue consumer health brand following the recent deal closure. Kimberly-Clark reported quarterly results last week that exceeded expectations.

The team initiated a position in Constellation Brands earlier this week. They cited improvements in beer sales and potential benefits from easing immigration policies following the Democratic midterm election wins as reasons for the buy. The trust's current portfolio composition reflects a shift toward these two names while reducing reliance on the off-price retailer.

TJX Companies is scheduled to report its earnings next Wednesday. The trust will monitor the results to see if the company has successfully addressed the internal issues flagged by analysts. The immediate portfolio adjustment reduces the financial risk associated with another disappointing quarter from the Marmaxx segment.