Sell Solventum (SOLV)
I’m recommending that we sell our position in Solventum (SOLV).
The company has given us a gain of 7%, but its post-earnings reaction has been anything but ideal. The turnaround in this company is going to take time and I think we can get back in at a better price down the road. But for now, I’m not willing to ride out what I see as additional weakness ahead as spin-related disruptions are likely to enter the picture as the company faces potential earnings pressure in the near term, as well as higher 3M supply agreement markups. SELL
Sell Baxter International (BAX)
I’m recommending that we sell our position in Baxter International (BAX).
Baxter is a legacy position from my immediate predecessor that was initiated as a Buy in February. The stock has had its share of ups and downs since then (mostly downs), but has recently established a series of lower highs. And while BAX is in a tenuous position as it struggles to establish support above the benchmark 33 price level (which held as support earlier this summer), our money management discipline is to sell any position that sheds more than 13% from its initial buy price (with exceptions made for unusual market conditions).
In addition, Baxter—despite its steady dividend history—decided to cut its dividend today by 41% (in anticipation of the divestiture of its Kidney Care business segment to Carlyle) and expects total company Q4 sales to be negatively impacted by approximately $200 million. SELL
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