We're exiting our stake in a disappointing stock that's getting a Berkshire bump
After the trade, Jim Cramer's Charitable Trust will no longer have a position in the alcohol stock.
Aliver
People take photos of the New York Stock Exchange at Wall Street in New York on Feb. 3, 2025.
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Shortly after the opening bell, we will be exiting our position in Constellation Brands, selling 225 shares at roughly $174 Following the trade, Jim Cramer's Charitable Trust will no longer own a position in STZ.
Shares of beer maker Constellation Brands are up 7% in premarket trading in reaction to Warren Buffett's Berkshire Hathaway disclosing it owned a small stake in the company at the end of 2024. According to the filing with U.S. securities regulators, Berkshire bought 5.62 million shares in the fourth quarter.
It's important to remember that these quarterly reports are backward-looking, which is why we always express caution about reading too much into them. Unless there are rumblings or a media report about position intent, it's unclear how the position may have changed over the past six weeks.
We'd argue the Constellation Brands story has become more challenged since the start of the year. The company is dealing with a slowdown in its all-important Mexican beer business, and the recovery in its long-struggling wine-and-spirits division has failed to materialize. Potential tariffs on goods imported from Mexico have added another negative wrinkle to the story after the industry failed to receive an exemption when President Donald Trump's tariffs on Mexican imports were first announced. It's still possible that Constellation Brands avoids higher tariffs, should Trump end up following through with them after an initial pause of at least 30 days. But for now, we must be mindful of the downside scenario.
It can be rewarding to see a stock you own find its way on Berkshire's ownership list, but given the headwinds the company is facing, we question if the firm is still invested. With shares up roughly 7% in premarket trading as traders follow Berkshire into one of its "newest" positions, we'll take advantage of this strength by selling our remaining shares, realizing a very disappointing loss of around 27%.
(See here for a full list of the stocks in Jim Cramer's Charitable Trust.)
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.
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