Hedgies Caused the Capital Destruction in Natural Gas

How long natural gas were these hedge funds? What were they thinking? What kinds of bets were being made?

I look at Anadarko (APC - commentary - Cramer's Take) and Devon (DVN - commentary - Cramer's Take) and Cabot (COG - commentary - Cramer's Take) and I have to laugh: These stocks were trading as if nat gas was going to $4. They were trading as if liquidation value was upon us.

Of course, now we see that the executives, one after another who came on my show, were right -- the valuations were preposterous at their lows. I struggle to believe we will see them again.

It is a head-scratching moment that one group could so captivate so many hedge funds, even more than the fertilizers, which are back on a tear (I like Terra Nitrogen (TNH - commentary - Cramer's Take)). I have often wondered if they drank their own Kool-Aid. The Pickens plan, which was the effort to get cars powered by natural gas, isn't talked about much anymore. Congress just didn't like it. Carbons are finished as even a bridge fuel in this country, given the Democratic hatred of the fuel, with Obama focusing on ethanol anyway (hence Deere (DE - commentary - Cramer's Take), Mosaic (MOS - commentary - Cramer's Take), etc. Bob Marcin's right.)

But the destruction of so much capital, the margining of this group, was just so painful that very few managers could survive the wreckage. I know we couldn't in Action Alerts PLUS, and I am glad we sold when we did.

I am also not excluding the execs from being margined out: Chesapeake (CHK - commentary - Cramer's Take) boss Aubrey McClendon is the unfortunate poster boy.

In retrospect, it looks like natural-gas-powered cars, something I so passionately believed in as a thesis, was "over believed in." Plus, we didn't get any takeovers when the stocks were lower. The whole thing was just wacky, and once again, a testament to a year where your fellow shareholders -- not the fundamentals -- were your enemy. Sure, nat gas plummeted, but here it is around $6, and that's plenty profitable for many of the players.

At the time of publication, Cramer was long Deere

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