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Dow Jones S&P 500 NASDAQ 10-Year Note
10,485.56 1,114.78 2,216.29 35.48
Oil *
73.56
UP
33.56
UP
6.85
UP
15.24
DOWN
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10 Yr
3.55%
SPDR Gold
111.33
+0.32%
+0.62%
+0.69%
-1.53%
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Commentary: James J. Cramer
*New* Alerts! Please click here...

Telecom Short-Sellers Hit the Trap Door
By James J. Cramer

8/15/01 9:07 AM ET



Read More
Click here for the latest from James J. Cramer.
Ever since the destruction of the momentum funds, courtesy of their terrible performance, the short-sellers have been able to run amok in telecommunications. They were helped, of course, by inept managements that had never seen a downturn and lawyers-turned-stupid businessmen who invaded telecommunications via the knuckleheaded telecom deregulation act of 1996.

Related Stories
Something's Gotta Give Soon
CenturyTel Leaps as It Rejects Alltel Bid
Alltel Shouts Proposal to CenturyTel
A Bell-Ringer for the Phone Consolidation Game

The shorts have trashed the group with impunity. And with the breakdown of the ability of AT&T, Nippon Telegraph & Telephone and Deutsche Telekom to overpay for anything in our markets, there was never a fear of a takeover, the only real natural enemy to short-selling.

Short-sellers had gotten so brazen that I saw them ganging up on the likes of Alltel (AT:NYSE - news - commentary) and CenturyTel (CTL:NYSE - news - commentary) and Broadwing (BRW:NYSE - news - commentary) lately, saying those stocks had gotten too expensive vs. the already brought-down Qwests (Q:NYSE - news - commentary) and Global Crossings (GLBX:Nasdaq - news - commentary). This unwinding of telecom moved up the food chain to the good guys, and shorts were laying all over this stuff to drive it down.

Until today. Today they are scrambling because Alltel went hostile against Century. You have to understand that these companies are not hostile kinds of companies. They are taking this stance, like First Union took the stance against Wachovia, because there is too much value and because they fear being taken over themselves.

I see a very quick move in telecom here as the shorts cover and the longs finally average down to improve their bases. This Alltel bid might be the first salvo in a recognition by the solvent players that the group went from being too expensive to too cheap in less than nine months. Amazing.

Random musings: Want in on the radio show and can't call? Try Radio.Feedback@thestreet.com.


James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. At the time of publication, Cramer was long First Union and Qwest. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@thestreet.com.
Send letters to the editor to letters@realmoney.com.
Read our conflicts and disclosure policy.
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Dow Jones S&P 500 NASDAQ 10-Year Note
10,485.56 1,114.78 2,216.29 35.48
Oil *
73.56
UP
33.56
UP
6.85
UP
15.24
DOWN
0.55
10 Yr
3.55%
SPDR Gold
111.33
+0.32%
+0.62%
+0.69%
-1.53%
Data delayed 20 minutes