United Deal Shows Private Equity's Alive -- and Flailing

Oh shoot, United Rentals (URI - commentary - Cramer's Take) and Cerberus. Well, isn't that great. The private equity firm that is causing the most problems out there with this darned Chrysler (DCX - commentary - Cramer's Take) deal is now out there buying the most cyclical company imaginable, a heavy equipment rental company, United Rentals, long a favorite short of hedge funds when they want to bet on a downturn. (I ought to know, I thought that shorting Brad Jacobs and United Rentals was an annuity when I was back at my hedge fund, and I have the returns to prove it.)

I say "oh shoot" because either these private-equity guys are Supermen oblivious to everything that is happening in the economy (did anyone there read the Caterpillar (CAT - commentary - Cramer's Take) release about domestic business?) or they are just plain morons who just go real lucky.

I am beginning to think they are the latter, just another group of lucky hotshots who took advantage of the low cost of capital and the cheapness of equities to make a ton of money and who can't seem to quit even when it is time to do so.

There are trillions riding on the success of these deals, almost as much as is riding on the mortgage group recovering. It is the twin killer of mortgage woes and the end of private equity that is causing the brokers to slouch toward two times book and 8 times earnings and without one of these turning the group will stay toxic.

So isn't this United Rentals deal a good sign that private equity is alive and well?

No.

It is a good sign that private equity is alive and stupid, doing a deal that can wait if it is really that good, a deal that would always be there, probably at a lower price if these firms would just walk away.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

As originally published, this column contained an error. Please see Corrections and Clarifications.

Jim 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. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.