CNBC’s Jim Cramer on Wednesday revealed his findings that his charitable investment portfolio of dozens of big-cap stocks could perform better under a Joe Biden administration than it would under another term for President Donald Trump.
“When it comes to earnings, to prospects, to growth, I was absolutely stunned that two-thirds of the stocks in my charitable trust would likely make more money under Biden than under Trump,” the “Mad Money” host said. “And given that Biden’s way ahead in the polls, maybe that’s being reflected in the averages.”
Cramer’s charitable trust, Action Alerts Plus, has invested more than $2.5 million in 30 stocks. The diversified stock list, which Cramer manages with a team of market gurus, is made up of tech names like Apple, software firms like Salesforce, defensive plays such as PepsiCo and health-care stocks like CVS Health.
U.S. relations with China is the common denominator behind why Cramer projects most companies in his philanthropic portfolio would see better returns, should Biden, a former vice president, win the Nov.3 election. One of the biggest benefits would be that corporate mergers that require clearance from Chinese regulators would have a better chance of receiving approval with a less-hostile administration in the White House.
“Take away the trade war and Broadcom can go back to making big deals that China will be willing to sign off on,” he said. “We know the Chinese regulators dragged their feet on Nvidia’s last big acquisition, Mellanox, even though there weren’t any legitimate antitrust concerns. They could do the same with Arm Holdings, but a Biden presidency would make that a lot easier.”
A month ago chipmaker Nvidia announced that it would pay SoftBank $40 billion to acquire Arm Holdings, which designs chips for the iPhone and Android phones. The deal will need regulatory approval from the U.S., U.K., the European Union and China.
Cramer clarified, however, that what’s good for the majority of stocks in his portfolio would not necessarily be good for the broader market.
“I am not saying Biden would be better for the stock market as a whole. The Trump White House has been very aggressive about wanting to keep the market happy,” Cramer said. “I’ve never seen anything like it.”
Since taking office in 2016, Trump has taken tough stances against China, which has the second-largest economy in the world, in hopes of reducing the trade deficit and boosting domestic manufacturing. Trump sought to crack down on trade practices employed by China. The country has been accused, among other issues, of stealing the intellectual property of American companies looking to do business in the country. China has denied the allegations.
In 2018, he notably waged a protracted tit-for-tat trade war with China, which Cramer was generally in favor of, that led to a phase one trade agreement in January. The wide-ranging tariffs that were placed on imported goods from China impacted both American companies and consumers.
“When you drill down to specific industries, I don’t have much appetite for the stocks that would benefit from a second Trump term,” Cramer said. “Stocks like the uninvestable coal industry, the oil industry, the gas industry … regardless of what happens in Washington.”
Disclosure: Cramer’s charitable trust owns shares of Apple, Salesforce, Nvidia, Broadcom, PepsiCo and CVS Health.
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