Jim Cramer's Best Blogs
By Jim Cramer 12/22/12 - 12:07 PM EST
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Some Stocks Are Just Too Dangerous Posted at 6:37 p.m. EDT on Thursday, Dec. 20 I've got not one, not two but three cautionary tales about what happens when you wander into battlegrounds, obvious battlegrounds that can be avoided. In fact, today's action provides a battlefield manual of where not to go, where the interstitial machine gunfire is so overwhelming that you know you are going to eat lead. We've got three companies, Mellanox Technologies (MLNX), Allscripts Healthcare Solutions (MDRX) and Herbalife (HLF), all vying for worst battlefields out there. Let's start with Mellanox Technologies. Here's one I put in the "sell block" a few months back, after it caught a gigantic gain. The Israeli semiconductor company had had a monster run. Next thing I know, the chief financial officer retired, and I thought it had just moved up too much, so I just said "enough already." Sure enough, Mellanox reported soon after, and it didn't have the best guidance, so I told people here to dump it. I said that while you can never get out at the top, I thought that once the stock was broken, it would stay broken. And that's just what happened. There are some obvious lessons here. When a CFO departs, even if the move is orderly, it is worth it to ring the register particularly, after a colossal run. Then once a red-hot stock reports a weak quarter, it doesn't pay to hang around, as the momentum people will sell relentlessly. That's what is happening in today's action. Then there's Allscripts Healthcare solutions, another hammered stock today. Allscripts, another "sell block" name, had faltered badly and lost out to Cerner (CERN) for a lot of business. I had urged people to bolt from it, but the CEO of Allscripts, Glen Tullman, tried to sell the company. I say over and over again that you can't speculate on a takeover if the fundamentals are in decline as they were with Allscripts, because who wants to buy a faltering business? Apparently no one; Tullman was fired last night.