'RealMoney' Radio Recap: The Frist Philosophy
U.S. Sen. Bill Frist should be given a Congressional Medal of Investing for being a smart investor, said Jim Cramer on his "RealMoney" radio show Monday.
Cramer said Frist, whose sales of HCA (HCA) are the subject of a probe by the Securities and Exchange Commission, likely did not trade on information received from management prior to his selling of the stock because if he had, said Cramer, he likely would have been buying. HCA management and Wall Street were overwhelmingly positive at the time of Frist's stock sales, said Cramer. Yet Frist sold anyway, which proved to be smart.
There are lessons to be learned from Frist, said Cramer. First, be skeptical when management and/or Wall Street are enthusiastically positive, said Cramer. Second, don't be a pig -- take profits when a stock is up huge. Third, understand the importance of sector trends. Despite HCA management's and Wall Street's bullishness, hospital trends were weakening at the time of Frist's sales, said Cramer.
So, give Frist the benefit of the doubt, he said. Frist was smart to sell, or at worst, lucky. But, he's most likely not guilty of insider trading because if he had listened to management, he would have been buying, not selling.
Stealing StocksLenny "Nails" Dykstra joined Cramer to talk about Wachovia (WB) and Metso Oyj (MX). Dykstra said Wachovia, despite being near a 52-week low, reported a "blowout number" Monday and reported no signs of credit deterioration. Cramer is concerned about what might get the stock moving but said he liked Wachovia's 4.25% yield. Of Metso, Dykstra said he liked the Helsinki-based engineering firm because it is expected to be very profitable over the next two years and has exposure to the paper, mineral, civil engineering and energy industries - all businesses that aren't going away, said Dykstra. Cramer said the break-up value of Metso appeared large. "Both ideas...resonate for this market," said Cramer.
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