Rueing Retail's Lack of Deals

No deals in retail despite incredible values. That's what I think about when I look at the J.C. Penneys (JCP - commentary - Cramer's Take) and the Macy's (M - commentary - Cramer's Take) of the world.

Both of these stocks have about $6 billion to $7 billion market capitalizations, and they are so lonely and so forgotten, it is hard to believe that not long ago these were dramatically bigger companies, $15 billion to $17 billion a year ago and even higher a year before.

A year ago, the private-equity firms would have been all over these companies, given their strong cash flows and steady expansion. Now they are pariahs. They also would have attracted each other -- these prices make too much sense to combine.

But now the money is just not there, and the cash flows look far more anemic. Welcome to the world of recession values because, as it is obvious, we are not going into recession.

In reality, the whole private-equity thing now seems like a sham. I remember when Macy's went private in the 1980s, and the company was so sure of itself. Of course, it went bankrupt soon after and had to restructure. Amazingly, it came out of the darned experience intact, but you can imagine how silly it all looked and how wrong it was.

It seems now that the same thing will happen with most of the retail companies that went private and are owned by these private-equity firms that would normally be getting ready to flip them.

They are outfits like Mervyns and Linens 'n Things, places with nothing really to recommend themselves but that were brought private by companies that had so much clout with the bankers that they could demand to go public and get in the queue.

Or, the M&A people would drool of combining some of these, like Sears (SHLD - commentary - Cramer's Take) and Home Depot (HD - commentary - Cramer's Take) or Macy's with Kohl's (KSS - commentary - Cramer's Take), or any deal that smacked of alleged synergy.

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