We will trim our Wells Fargo (WFC) position after you receive this Alert, selling 400 shares at around $51.98. Following the trade, WFC will represent roughly 3.92% of the portfolio.

As we recommended members do a couple of weeks back, now that we are unrestricted, we are trimming our WFC position to lessen our exposure to the embattled financial name that has run more than 16% since just before the presidential election results were announced.

The recent bank rally has been predicated on expectations for rising interest rates and speculation regarding potential deregulation as part of the new administration, both of which bode well for WFC, especially considering the tender footing on which the bank stands following its sales-practices scandal. These forces have provided an overall boost in investment toward financials, which have seemingly been searching for a reason to rally, boasting attractive valuations ever since the industry underwent regulatory overhaul following the financial crisis.

While we believe the rally has largely been deserved, we also recognize that the swift move higher has priced in many benefits, which, at this point, still rely solely on speculation. When it comes to WFC, we find it prudent to take some off the table in a name to which the portfolio is heavily weighted in order to help de-risk ourselves from any further headlines and regulatory action while still being able to benefit from further upside.


Jim Cramer, Portfolio Manager & Jack Mohr, Director of Research
Action Alerts PLUS

DISCLOSURE: At the time of publication, Action Alerts PLUS was long WFC.