Secondaries Are Offering Solid Returns Here

One great way to gauge a market is how secondaries are holding up. You do a secondary when you are in dire need of capital and when the banks are calling for your head. You never want to do one, particularly after a stock has been "softened" so existing shareholders get annihilated.

But this time, ever since the market bottomed, every time there had been one of these, you had to act, and act fast. Consider CIT (CIT - commentary - Cramer's Take). Here's a left-for-dead stock that has, improbably, given you a terrific 20% gain since the pricing at $4 of a $300 million offering near the end of the year. Admittedly, CIT has done a ton of different kinds of offerings all the way down, and you have been punched in the stomach each time you participated. But not this time. And it's been one to watch now that CIT's got TARP money.

I think that the casino secondaries from Wynn (WYNN - commentary - Cramer's Take) and Las Vegas Sands (LVS - commentary - Cramer's Take) have done extremely well against what looked to be hopeless odds given casino balance sheets and the Macau problems. Steve Wynn, however, has always been a terrible guy to bet against, and his bonds represent great value, too. I am astounded at the rally in LVS, which many people -- including yours truly -- felt was headed to the grave. Instead, China -- the engine -- is talking about lifting Macau restrictions, and the stock is lifting off with it. Monster 54% move that in retrospect looks like easy money, but in reality was hard-fought.

The one that is most surprising -- if you were nimble -- is Wells Fargo (WFC - commentary - Cramer's Take), which has given you numerous chances to take a profit and is still above the offering price despite yesterday's pummeling (which I bought for Action Alerts PLUS.) I think it is a testament to great pricing more than a testament to great fundamentals, at least for the moment.

I am always looking for signs that the market may not be "as bad" as people think. This secondary performance is one of those signs. Obviously, it has not led to the issuance of IPOs, a business that it totally moribund, but the action in NYSE Euronext (NYX - commentary - Cramer's Take), a great play on IPOs, looks like it can't be that far behind.

Keep this table in mind before you sniff at the stock market. These gains are worth getting for certain, and they say that the next secondary might be worth putting in for.

At the time of publication, Cramer was long Wells Fargo.

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