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Cramer's Take on Eddie Lampert's Stocks

James Altucher

We often look at opportunities that involve earnings-guidance revisions, stock buybacks or shareholder activism among many other setups. But sometimes, especially when it involves a brilliant, successful investor like Lampert, you might wonder whether you should just jump right in.

After all, Lampert clearly does his homework with his investments and is a long-term holder in most situations. However, our own Jim Cramer would implore you to do your own homework and not blindly follow someone into a stock, even the greatest investor of all time.

With that in mind, we set up Cramer's Take on Eddie Lampert Stocks, a portfolio that offers Cramer's stance on a few of the stocks in Lampert's holdings. We gleaned Cramer's opinions from comments made on his "Mad Money" TV show and in his Wall St. Confidential videos on TheStreet.com TV.

First up is Lampert's largest holding, Sears Holdings(SHLD Quote), where Lampert serves as chairman.

Cramer's Take: Cramer addressed Sears' recent sharp decline due to earnings woes. "The company has to start making some sales and selling some of its real estate," he said.

The current situation is such that Cramer believes people should hold Sears for the longer term. Cramer said that while he is disappointed in the stock, which he owns for his Action Alerts PLUS charitable trust, he is not selling it now.

To watch Gregg Greenberg's video take of this column, click here.

He also touted Sears on a Wall Street Confidential video on June 21 as having the potential to become the next domestic Berkshire Hathaway(BRK.A Quote). "I think every portfolio has to take the risk/reward here of finding the next [Warren] Buffett," he said.

"A selloff in a healthy environment, where inflation is under control and interest rates are stable ... is a great opportunity to pick up leadership names like a Sears," Cramer said. "These are all asset managements -- that's why I like them. They aggressively manage their assets, and that's what you should be buying."

He also has noted that "Eddie Lampert is a terrific investor, and he's the brains behind Sears. ... I am urging patience. I don't want people to quit Sears."

Next on the list is Citigroup(C Quote), one of Cramer's favorite plays. Lampert recently invested in this one, as disclosed on May 15.

Cramer's Take: "For the life of me I don't understand why everyone isn't buying Citigroup. You've got a much better than average yield," Cramer said in a June 21 RealMoney blog post. "You have a management that doesn't have a clue and could be gone in an instant, which would mean you could pick up a quick $3 or $4. You have a company that could be a big gainer worldwide, and it is a ROWer (that's rest-of-world, for those who've missed my thousand references to it)." For his other rest-of-world stocks, check out Cramer's ROW Stocks on Stockpickr.

Cramer further explains, "I am blown away that this stock has been stuck at $53 with all of these positives lurking. This isn't Bank of America(BAC Quote), where you can only hope that they stop buying things. This is one of those stocks where you could have a dramatic move up on any talk of a breakup or a change at the helm, and in the meantime you will get paid to wait."

Next up is Dell(DELL Quote), whose founder, Michael Dell, invests his money with Lampert.

Cramer's Take: Cramer says Dell is one of the old four horsemen replaced by the New Four Horsemen of Tech: Research In Motion(RIMM Quote), Amazon(AMZN Quote), Google(GOOG Quote) and Apple(AAPL Quote). However, Cramer likes Dell and says, "I think getting off the Dell horse is wrong."

This is not to say he is bearish on the old horsemen. "Dell could double because Michael Dell is back, but that is not a secular growth, that is a great-man theory," Cramer said.

Michael Dell built a great company and is not back for no reason. What's really great about Dell, he said, is the skepticism with which he's being viewed. "The company caught three downgrades after he came back," Cramer said. "That again represents the old thinking that I'm talking about."

That said, he believes Dell can't grow as far as RIM or Apple because it doesn't have the kinds of new products as the latter two.

"But what it does have is the potential to have more gross margin than it's had because Michael Dell is a master at finding ways, on a nice revenue gain ... of making more profit," Cramer said.

Cramer also liked a call from Bear Stearns in which the firm raised its forecast for PC sales, and he said Dell is a great story for the second half of the year. "I would be a buyer of Dell here," Cramer said. "I think Michael Dell's a winner."

Finally there's Motorola(MOT Quote). Lampert recently disclosed a nearly 1-million share stake in the company.

Cramer's Take: "I am also pro-activist pretty much everywhere I can find it. Richard Parsons was instrumental in making me feel that Carl Icahn's contributions are welcome. He, too, came on my show and said that. I am appalled that Ed Zander, the CEO of Motorola, doesn't welcome Icahn with open arms. He needs it."

Cramer is not a big fan of Motorola for a number for reasons but largely because of Zander. "It takes years of hard work and incompetence to make it onto Cramer's 'CEO Wall of Shame,'" Cramer said on his July 5 "Mad Money" show. When Zander took over Motorola in 2004, the stock almost doubled, Cramer said, but he didn't have what it took to keep it going.

"Ed Zander could immediately improve morale by deciding to spend more time around the house," Cramer said, and give up his CEO spot.

And to sum up his own position on Motorola, Cramer said we must read RealMoney Contributor Robert Marcin's piece on Motorola after the company's pre-announcement last week.

In his July 12 "Columnist Conversation" post on RealMoney, Marcin wrote:

Motorola's (MOT) preannouncement revealed a complete debacle. The company shipped 52 million handsets in last year's June quarter. It forecasted 35 million this second quarter.

In the past six months MOT has lost 1,000 basis points of market share in a decent handset market. In all my years I have never seen anything like this mis-execution. It's hard to understand how MOT could screw up so badly with all of their global resources. ...

The board of directors needs to recruit a completely new management team. I call it a zero-based restructuring, and it should include the entire Board's conditional resignation after a new CEO is found.

This Board is contributing to the destruction of a once powerful franchise. The company really needs a CEO with a strong operational background, unlike their current marketing-oriented chief. Changes must be made now!

To see Eddie Lampert's entire portfolio, check out the Edward Lampert portfolio and feel free to check out Cramer's Take on select Eddie Lampert's Stocks, both of which can be found on Stockpickr.com.