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NEW YORK (
TheStreet) -- "When hedge funds bet against 'overvalued' stocks, they better have the whole story," Jim Cramer told his
"Mad Money" TV show viewers on Tuesday, as he opined on a handful of high-momentum stocks that seem to have defied gravity.
Cramer explained that all investors, even big ones, can get themselves on the wrong side of a trade and bet against the wrong stocks. Such was the case with a handful on names, he said, those where hedge funds determines that the fundamentals didn't justify the stocks' sky-high prices. The only problem was, they were wrong.
The newly-minted shares of
Michael Kors(KOR) was one such name, said Cramer. He noted that just last week he declined to recommend the stock because it had exceeded his limit of a multiple twice that its growth rate. But today, Kors delivered stellar numbers, seeing a 35% surge in European sales alone. The news sent shares rocketing higher, forcing out all those who shorted it.
Cramer noted that another accessory retailer,
Fossil(FOSL - Get Report), also seemed overvalued with a slowing growth rate. Yet on the company's conference call, company management said they see growth accelerating, news that sent shares up 14% in a single day.
Netflix(NFLX), which ramped another 4% today, or
Apple(AAPL), a stock which Cramer owns for his charitable trust,
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Chipotle Mexican Grill(CMG), Cramer said sometimes it just doesn't pay to bet against these high-flying companies.
Cramer's recommendation to hedge funds, "bet against stocks where the fundamentals are actually bad, not those that seem to have run too far."