The technicians are often in charge at a moment when all is in flux, and one of the stocks I have flagged that looks really sick is Beam, the now-overvalued spirits play vs. Diageo (DEO) and Brown-Forman (BF.A). These are two vastly superior enterprises to Beam, as they sport better international and domestic prospects, respectively. Given the concentration in the spirits industry, and after the U.S. Airways (LCC)- American Airlines fiasco involving the Justice Department, I don't know how Beam could get a takeover bid that would pass muster. It's also very yesteryear to think liquor stocks somehow won't fall from their perch in a broader downturn.
Finally there is Procter & Gamble. In many ways, this is the most vulnerable of all of Ackman's big buys, and the one most prone to profit-taking, even by him.
I regard P&G as a dangerous long here. It offers just a 3% dividend yield to protect it from a downturn, which is a thin piece of threat indeed if the risk-free 10-year U.S. Treasury ticks at 3%, where it certainly seems as though it is headed. This group, including P&G, looks about as toppy as any in the chart book. That makes a ton of sense. First, it is seriously overvalued vs. historic levels. Second, we know there's a diminution of the emerging growth market, the best place for P&G to expand. Don't believe me? Go listen to the commentary on the vastly superior Unilever (UL) earnings call.
Now, there is always the possibility that A.G. Lafley, the CEO who just returned to the helm at P&G, will try to break up the company. But I regard him as nothing more than a caretaker, and I can't see it happening.So let's add them all up. If you think this market is in the process of rolling over because of rates and the technicals, I can't think of a better place to go short than with the Ackman names. If J.C. Penney pulls the quarter out of the fire, maybe there will be a reprieve to the portfolio. But if bonds keep going lower? Perhaps it just won't matter, and you'll have a legitimate free-fire zone going, because I can't think of a worse portfolio to have at this very moment than what Ackman's Gotham has been able to cobble together. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL.
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