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"I've got the stock that's the antidote to the toxin of subprime working-class lending," Jim Cramer told viewers of his "Mad Money" TV show Thursday.
"The stock that says you will make money as the price of your house goes down ... is
Annaly Capital Management
," he said.
Michael Farrell, Annaly's chief executive, is the only CEO who saw the subprime-mortgage crisis coming and positioned his company to flourish. Cramer said he hasn't always been right about Annaly. "I doubted the company before, and I shouldn't have," he said.
When he first met Farrell, Cramer said, Farrell had a really good track record, so Cramer recommended the stock on his former TV show, "Kudlow and Cramer." However, the stock sunk and the
dividend got cut. While Cramer was licking his wounds, Annaly changed its approach and decided to cut back on its residential mortgage exposure, he said.
"When you buy a mortgage or invest in a pool of mortgages, you're basically investing in
risk," Cramer explained. There are two types of mortgage risk: the less-speculative interest-rate risk and the more-"scary" credit risk.
Companies that play in credit risk have gotten "killed" during this crisis, Cramer went on to say.
"The media constantly gets these two types
of mortgage risks confused and thinks everyone is in the credit-risk game," he said.
Because the press doesn't always get it, Annaly gets lumped with all the other mortgage lenders, which is why Cramer believes right now is a "great opportunity" to get into Annaly.
Cramer's pick on the paper trade is
. It is the "big winner" from the new antisubsidy and antidumping tariffs the U.S. has imposed on coated free paper from China, Cramer told viewers.
Most companies that make coated free paper, the glossy paper found in magazines and yearbooks, are private, he said. Further, Cramer said he believes "the tariffs could make a real short-term difference for SPP's
However, he stressed that Sappi is a trade idea, not an investment idea. Over the long term, Cramer believes, this South African paper company won't be able to compete against its Chinese competitors.
Cramer dedicated his "Sell Block" segment to
Michael Snyder recently
stepped down as Vonage's CEO, and Jeffrey Citron has taken his place. However, because Citron was "banned from the securities industry in 2003," Cramer believes he "should not be allowed to be the CEO of a public company." This new appointment is just one more reason to sell Vonage, Cramer said.
Cramer also put
Johnson & Johnson
in the sell block, saying he likes the company but that he got it wrong.
J&J used to be best of breed, but the truth is there are very few blue-chips left, and this drugmaker is not one of them, he said. Not only are its drugs starting to come off patent, but J&J's Invega drug has been a "huge disappointment."
In addition, Cramer advised viewers to sell
Friedman Billings Ramsey
, which he believes is "trying to create money from nothing."
"Its problem is that it's the opposite of Annaly" and has exposure to some bad subprime lending, he said. Moreover, while people might be inclined to buy the IPO of its
FBR Capital Markets
unit, Cramer warned investors against it. On some metrics, Cramer said, the subsidiary is also worth nothing.
chairman and CEO, joined Cramer on the show by phone and said his company is "trying to recreate the software industry by delivering a set of Internet services that replace traditional enterprise software."
The focus on this end of software, Benioff said, is one of the reasons the company has become "the fastest-growing software company" of its size in the world. Salesforce has recently signed contracts with
, each of which chose Saleforce's new model over
, he said.
Cramer commented that a lot of companies that have gone up against Microsoft and Oracle have faltered, and he asked Benioff why Salesforce.com would be different. "The companies that win in our industry are the ones that change the game," Benioff replied.
"They have to change the game in two ways -- the technology model and the business model -- and that's what we're about," he said. "That's why we've won so many of these very important customers around the world."
Cramer said he's not going either way on Salesforce and urged viewers to reach their own decisions on the stock.
To view Cramer's interview with Marc Benioff, please click here.
During the show's "Sudden Death" round, Cramer was bullish on
Las Vegas Sands
. He was bearish on
Cramer was bullish on
Bank of Nova Scotia
International Securities Exchange
Cramer was bearish on
J2 Global Communications
Smith & Wesson
For more of Cramer's insights during the most recent Lightning Round, click here
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At the time of publication, Cramer was long Express Scripts.
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