(This article was sent first to members of the CNBC Investing Club with Jim Cramer. To get the real-time updates in your inbox, subscribe here.)
After you receive this email, we will be buying 500 shares of Bausch Health (BHC) at roughly $26.43. Following the trade, the Charitable Trust will own 2,000 shares of Bausch Health. This buy will increase BHC's weight in the portfolio from about 0.93% to about 1.24%.
As members know, we are looking forward to hearing from management on Wednesday when the company presents at the JPMorgan Healthcare conference (slide deck here). Ahead of the conference, we took the opportunity last week to revise our price target on the stock to $36 from $29, believing our initial estimates for the rapidly growing Solta Medical operating unit, which is expected to IPO early this year, to have been too conservative.
Since our price target revision on January 5th, shares have pulled back an additional ~3%, resulting in a ~7% pullback off of late-December 2021 levels, despite no change in the underlying fundamentals.
With the Solta IPO on the near-term horizon, and additional details coming out this week during the conference (we expect further updates on top of the slide deck provided already when management speaks tomorrow – details here), we believe investors will begin to place a greater focus on the sum-of-the-parts valuation that our investment is predicated on. We therefore want to bulk up on this position before it gets away from us.
While we do not violate our overall cost basis lightly (we are up ~3% on the position at the time of this alert), we do believe the weakness thus far in 2022 is presenting an opportunity that we want to take advantage.
Given that the position will represent ~1.24% of the portfolio following this trade, we believe it will be large enough for us to benefit from any move higher while remain small enough to provide us plenty of room for additional buys should further weakness ensue.
The CNBC Investing Club is now the official home to my Charitable Trust. It's the place where you can see every move we make for the portfolio and get my market insight before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.
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. See here for the investing disclaimer.
(Jim Cramer's Charitable Trust is long BHC.)