Cramer's 'Mad Money' Recap: Annaly's Safe House

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"I've got the stock that's the antidote to the toxin of subprime working-class lending," Jim Cramer told viewers of his "Mad Money" TV show Thursday.

"The stock that says you will make money as the price of your house goes down ... is Annaly Capital Management (NLY Quote)," he said.

Michael Farrell, Annaly's chief executive, is the only CEO who saw the subprime-mortgage crisis coming and positioned his company to flourish. Cramer said he hasn't always been right about Annaly. "I doubted the company before, and I shouldn't have," he said.

When he first met Farrell, Cramer said, Farrell had a really good track record, so Cramer recommended the stock on his former TV show, "Kudlow and Cramer." However, the stock sunk and the dividend got cut. While Cramer was licking his wounds, Annaly changed its approach and decided to cut back on its residential mortgage exposure, he said.

"When you buy a mortgage or invest in a pool of mortgages, you're basically investing in risk ," Cramer explained. There are two types of mortgage risk: the less-speculative interest-rate risk and the more-"scary" credit risk.

Companies that play in credit risk have gotten "killed" during this crisis, Cramer went on to say.

"The media constantly gets these two types [of mortgage risks] confused and thinks everyone is in the credit-risk game," he said.

Because the press doesn't always get it, Annaly gets lumped with all the other mortgage lenders, which is why Cramer believes right now is a "great opportunity" to get into Annaly.

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