Analysis: APC CMCSA BP

Shortly after the opening bell, we will be selling 200 shares of Anadarko Petroleum Corp. (APC) at a bid/ask of roughly $44.00/$45.20. In addition, we will be selling 200 shares of Comcast (CMCSA) at a bid/ask of around $39.79/$40.00. Following the trades, APC (1,050 shares) and CMCSA (2,200 shares) will represent 1.73% and 3.24% of the portfolio, respectively.

We are looking to raise some cash this morning by pruning a weaker name (Anadarko) and locking in a gain on a stock (Comcast) that has been on an impressive run.


Starting with Anadarko Petroleum Corp., while it is tough to realize this 35% loss on our earliest lots, we want to raise cash by trimming our weaker names and keep our stronger position on the books. Neither this stock nor this company has been as good as a performer as BP plc (BP) , our preferred name in the sector, and while the price of oil has acted better as of late, APC simply has not. With the price of WTI crude back above $58 but the stock not budging, our concern is that the price of crude won't break out and the stocks of the exploration and production companies will pull back again. Even though the stock is very cheap from a free cash flow perspective, the stock doesn't have enough yield support to protect us from downside. We made a pledge into this year that we will be more "trade-like" with our energy stocks, and this decision follows up on that promise. Therefore, we are going to take a little off our position this morning and lighten up on our overall energy exposure.


We will also trim our position in Comcast. The shares have been on a tear this year, gaining nearly 17% year to date and we are looking to lock in some of our big gains. We think the positive sentiment in the stock relates to the discovery by investors that Comcast represents a cheap international growth stock, driven by the acquisition of Sky Plc. Well it took them long enough, because this is a complete 180-degree change from the initial negative reaction to the Sky plc deal which incited concerns that Comcast had overpaid and had taken on too much debt, despite the significant free cash flow generation at the company level.

You may recall that shares were punished to the low $30s last spring, a time when we expressed that the pullback needed to be bought and we added to our position in our Alerts here and here). But as we frequently pointed out to club members, like in our Alert here, history said that acquisition-related selloffs in CMCSA are the time to buy. Looking back at their previous huge deals (NBCUniversal and AT&T Broadband), the stock usually falls 7% in reaction to the deal, then turns into a significant outperformer. History has repeated itself here, as CMCSA has rallied about 11.65% since the company secured the highest bid for Sky in late September, compared to a roughly 3% drop in the S&P 500. We'll downgrade our CMCSA rating to a Two off this big outperforming move that has pushed the stock a few dollars below its all-time highs and realize a gain of about 29% with this sell.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long APC, BP and CMCSA.