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Jim Cramer's Best Blogs

Jim Cramer

02/02/08 - 10:25 AM EST

Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:

Click here for information on RealMoney.com, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

The Five Great Lies About Eddie Lampert

Originally published on Jan. 28 at 9:56 a.m. EST

Time for some truth about Sears Holdings (SHLD - Cramer's Take - Stockpickr). I am sick and tired of reading the misstatements and endless criticism of what Eddie Lampert -- who is my friend -- has done with Sears and Kmart.

First, Lampert's firing of Aylwin Lewis was necessary, as someone has to take the heat for some of the decline (more on why "some" in a moment.) For some reason, Eddie Lampert is credited -- denigrated -- for everything from merchandising to the look and feel of the stores. That was Lewis' job; he didn't do it. It's good that he is gone. Let's call Lampert's alleged micromanagement of Sears Lie No. 1.

Next, Lampert's prices have not been jacked up since he got the job. He has cut prices -- not as low as Wal-Mart's (WMT - Cramer's Take - Stockpickr), but certainly lower than the CVS (CVS - Cramer's Take - Stockpickr) and Rite-Aid (RAD - Cramer's Take - Stockpickr) and Target (TGT - Cramer's Take - Stockpickr) level. Let's call that Lie No. 2.

Third, while Lampert did pay too much at one point for stock, he also bought stock at great levels before. The articles make it sound like Lampert is the only one who has bought back stock "badly," but the list of companies that bought back much higher is jammed with hundreds of names; only Lampert gets hit by it.

Macy's (M - Cramer's Take - Stockpickr) has done a reckless buyback, levering up its balance sheet, at much higher levels. However, I never read a bad work about Terry Lundgren and his cash management as CEO. I think his stores look terrible, but nobody writes that, either. Or how about Home Depot (HD - Cramer's Take - Stockpickr)? Disastrous buyback at much higher levels with some real increases in debt to fund it. Lampert hasn't added one bit of debt to the balance sheet to buy, has tons of cash and has a $4 billion line of credit.

Plus, his buyback has actually reduced the float significantly; no buybacks countering management options -- or Lampert's stock -- but a real buyback that I love to see. If Lampert gets it right, or if the economy improves, this stock will pop harder than any other retailer because of this float shrinkage. Even though it is the nation's third-largest retailer, it is basically now NOT a large-cap company. Let's call that the third lie about this company and Lampert's work.

(Oh, and I am not even including the buyback of the paper that wrote the most recent hit job, New York Times (NYT - Cramer's Take - Stockpickr), where most of the stock was bought back in the $30s and now it is $14. The company bought so much stock back that the buyback amount exceeds the worth of the company. Nor am I including the amazingly poor buybacks of so many financials many of which are now issuing more stock much lower than they bought it back. You don't read much about that, either.)

Lie No. 4: If Eddie had put a huge amount of money in his stores, it would have mattered a great deal to the business. I don't know, a lot of the other stores I follow have put in a huge amount of money and it hasn't helped much at all. There is no sign that it would have mattered. More important, Lampert has simply demanded a return on his investment. The other guys haven't had much if anything for the money they have thrown at their stores. Why is that not considered reckless? Lampert has returned capital to his shareholders instead, and over a three-year period, that's been very right. Why not look at that time period?

Finally, there are now charges that Lampert's partners in ESL Investments are now unhappy, hinting that they might leave. First, I know all of the large partners, and I don't know a soul who is unhappy with Lampert's performance, which is well above the S&P 500, 1,000 basis points during this current lock-up, to be exact. Second, Lampert's investment in Kmart, which is what started the investment, is up 10 times since he started. TEN TIMES! Who can be unhappy with that? Lie No. 5.

Has Sears done a great job in this period? Absolutely not. Have any of the major hardline or softline retailers done a great job in this period? Definitely not. Is Lampert the only one singled out for ridicule and pillorying? I think yes.

It's also personal. Lampert is regarded as an iceman and a secretive character. First, the man was kidnapped; the kidnappers are in prison, for life. That would certainly change me (and, in reality, it has affected the way I do business since it happened). Second, he responds to everyone on the Sears Holdings Web site. Why waste his time endlessly defending when he needs to help set the tone and recruit for the business, which isn't easy given the endless carping. Finally, for what it's worth, those who know and have known Eddie for more than 25 years as I have can't even recognize these characterizations. He's smart, funny, open and terrific. I know that's neither here nor there, but there isn't an element of this man's life that isn't open to scrutiny, and it just plain seems wrong.

This is not about buying Sears. Last week, the stock spiked 9 points in a day, and my discipline for Action Alerts PLUS is to sell some up 9, which is what I did, locking in a great gain.

But this stuff is just too wrong, too dissembling, to ignore any more.

Lampert just doesn't deserve this press. He doesn't deserve it after a lifetime of outperforming and doing better than just about any money manager on earth.

I rest my case.

At the time of publication, Cramer was long Sears and CVS.

Fed Cuts Are a True Panacea

Originally published on Jan. 29 at 10:34 a.m. EST

Fed cuts make things better. They make them better for Verizon (VZ - Cramer's Take - Stockpickr) -- where I see elsewhere writers are concerned about ARPU. They make them better for Caterpillar (CAT - Cramer's Take - Stockpickr), where people are momentarily less worried about the U.S. because it is diminishing as a percentage, not because people think it will be worse.

And most of all, they make them better for retail and housing. If you go through the Ryland (RYL - Cramer's Take - Stockpickr) call, you will see this. January has picked up. You would also see it in Phillips-Van Heusen (PVH - Cramer's Take - Stockpickr), where the CEO, Manny Cherico, is adamant that he sees a turn, which is really bullish given that inventory is lean, so there could be a rebuild of gross margins. Oh boy has that stock been hammered. I continue to believe that Nordstrom (JWN - Cramer's Take - Stockpickr) makes sense here, and I would reiterate that Costco (COST - Cramer's Take - Stockpickr) and Urban Outfitters (URBN - Cramer's Take - Stockpickr) had good December comps, so January should be easier.

Cramer: Banks Need a Fed Cut to Survive
Remember the power of low interest rates. They are a motivator. They provide perhaps 10 times the firepower of a stimulus package and can be good for those who need it, as opposed to those who don't. Who knows? When you consider that PVH is selling at 9 times earnings and used to sell at 18 times earnings -- after only one miss -- that might be a good one to sink your teeth in.

We are not there yet, despite the bulls' protestations. The move that I am seeing is no more than we see at McDonald's (MCD - Cramer's Take - Stockpickr), which says that comps will be up 1 and change and not flat.

But the change is happening and will continue to happen if the Fed decides it is worth being in front of the curve and that their three-quarter-point move -- something that normally would have taken them until June to do -- is beginning to work.

Random musings: Bear Stearns downgrades McDonald's today, saying it has a premium multiple that may not be deserved. How is a 16 multiple a premium for a 10% grower? ... EMC (EMC - Cramer's Take - Stockpickr) at $15, worth less than when VMWare (VMW - Cramer's Take - Stockpickr) came public despite accelerating earnings. That's people long EMC short VMW unwinding the position. Opportunity even with hated tech.

At the time of publication, Cramer was long EMC and McDonald's.

We Can Rest Easy

Originally published on Jan. 30 at 3:00 p.m. EST

The market's so-far-muted response to this good news is part of the confusion that is out there, the confusion that there's really nothing that can be done to fix things.

That's wrong. Do you realize that EVERYTHING depends on house price appreciation, or at least stemming house price declines, and there is nothing they can do better than what they just did.

If houses are cars, this is oil and the more oil the better. If these are coals needed to stay warm for us to be able to eat, this is lighter fluid. It is simply a way for the country to say, "OK, let's refi, let's look at property again, let's not be too negative."

Anytime we can take a calamity off the table, we should recognize that there is a sizable group of people that genuinely believes that a WaMu (WM - Cramer's Take - Stockpickr) or a Wachovia (WB - Cramer's Take - Stockpickr) is going belly-up. This cut makes that less likely.

This has to make you bullish, it has to make you tune out the people who say that the Fed doesn't matter or that you must now worry about inflation.

I just wanted to stop worrying about systemic national bank failure. A point and a quarter in a 10-day period tells me that you can rest much more assured that things will get better soon.

Random musings: It's aggravating to me that so many in the press say things don't matter.

At the time of publication, Cramer had no positions in the stocks mentioned.