Sell 'Garbitrage' Stocks Before They Blow Up

Garbitrage is coming back to hurt a lot of stocks -- and the people behind them. A few months ago, brokers were willing to lend hedge funds and mutual funds so much money that these borrowers were able to go into managements and threaten a sale. Sometimes they did it because, well, it looked like they just backed into the situation.

Take-Two (TTWO - commentary - Cramer's Take), for example, has a whole series of holders who look like they backed into the situation and endlessly averaged down perhaps without having a clue of what they were really buying. Did Oppenheimer really get into this stock to own 24% of it? How about D.E. Shaw? Tudor? SAC Capital? Some of these funds are simple trading funds. Now they are investors. Did they know that there may not be any there there, and that what is there might get shut down by the Democrats?

How about Ameritrade (AMTD - commentary - Cramer's Take)? SAC and Jana Capital want changes, want a sale? Ameritrade is an excellent company in it for the long haul. It has solid inside owners and has done a great job in a tough environment. But why should it listen to Jana and SAC now? What are those two hedge funds going to do? Make noise? Give me a break.

How about WCI Communities (WCI - commentary - Cramer's Take)? Does Sandell Asset Management want to own these fellows? How about SAC again? They had their chance, didn't take it. They had a $22 bid from Carl Icahn, for heavens sake.

Or even Target (TGT - commentary - Cramer's Take)? Can Bill Ackman now get a credit line to buy enough shares to force Target to do anything but laugh? Can he now force Borders (BGP - commentary - Cramer's Take) or Barnes & Noble (BKS - commentary - Cramer's Take) to go private or merge? Who is going to lend either money? Why do they have to?

NovaStar (NFI - commentary - Cramer's Take) with Babson Capital? I mean, NovaStar did a four-for-one reverse split and it's almost back where it started from?

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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.

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