On Thursday, Jim Cramer and Jack Mohr announced to Action Alerts PLUS subscribers that they will be exiting their position in Kinder Morgan in favor for a new position in Occidental Petroleum. Rhonda Schaffler spoke with Cramer to discuss the move. Although Kinder Morgan and Occidental may have the same yield, Cramer told Schaffler that ‘we want to be involved with oil as oil goes down, because I don’t think that at this time next year, oil is going to be in the mid 50’s,’ leading Cramer to believe that no is the chance to buy Occidental. Kinder Morgan is also an energy company dealing in oil and gas, but as Cramer and Mohr pointed out in their announcement, ‘we are exiting our position not on any reduced conviction in our overarching thesis but because shares have appreciated to a point where we see meaningfully more upside in OXY on a relative basis.’ Along with the new investment in Occidental, the AAP portfolio also has an open position in Energy Transfer Partners and actually added to their position in the company late last week. Cramer suggests that investors be ‘a little more levered to the price of crude and a little less to just the toll road of pipeline,’ which was another factor leading to their decision to swap these two energy stocks.
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