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After four "miserable" weeks, the market took a significant turn when an influential bearish analyst surrendered, Jim Cramer told told viewers of his "Mad Money" TV show Monday.
He said that noted analyst Meredith Whitney's upgrade of
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS, finally signaled the surrender of one of the last holdouts of market naysayers.
Cramer said Whitney's bearish views towards the financials have been wrong for months. However, since many investors follow her, her change of tone is significant enough to send the markets higher today.
According to Cramer, naysayers like Whitney have assumed that 100% of the adjustable rate mortgages taken out between 2005 and 2007 would default. Even if this were true, said Cramer, the banks have already written off more than $1.4 trillion of loans under a 100% default rate scenario.
Cramer said it doesn't matter why Whitney changed her mind, or why she was to late to do so. He said it just matters that a noted bear has embraced the bulls, and that will only help the markets begin to recover.
Unraveling the Frontier Deal
will soon find themselves shareholders of the lesser known
as part of a pending transaction between the two companies.
Cramer dissected the deal with Frontier's president, chairman and CEO Maggie Wilderotter.
As part of the deal, Frontier will buy 4.8 million rural landlines in 14 states from Verizon, in return for stock and debt. Verizon holders will receive 1 share of Frontier for every 4.2 shares of Verizon they own.
Wilderotter said that the deal will triple Frontier's size and make it the largest rural communications provider in the U.S. The company expects over $500 million in cost savings. Wilderotter said the rural market is Frontier's business and the company understands those markets better than anyone.
Frontier has a long history of innovation, said Wilderotter, including offering free PCs to customers in return for bundled services. She said the company does a great job providing value to customers and makes more money, with fewer losses, than bigger companies like Verizon.
After hearing the particulars of the deal, Cramer said he's a believer in the company, saying he's be a buyer, but only after those Verizon shareholders who are likely to sell their new found Frontier shares have done so.
Rising From Bankruptcy
Can a company in bankruptcy be worth adding to your portfolio? Cramer said if the company is
, then the answer is "yes!"
After being tipped by a viewer in last week's Lightning Round, Cramer said he did some homework in W.R. Grace and discovered the company should emerge from its asbestos-induced bankruptcy in the next few months. The new W.R. Grace will have all of its claims settled, will keep its common stock in tact, and will raise additional capital through warrants, not equity.
According to Cramer, the story at W.R. Grace is one of improving fundamentals, as the company has strong market share and margins in both its specialty chemicals and industrial products divisions. He said the company does have some housing exposure, but also a large overseas business to take advantage of a weakening dollar.
Cramer said there is no urgency to buy shares of W.R. Grace, and all speculative precautions should be taken, including using limit orders and not buying after hours. But as W.R. Grace emerges from bankruptcy this fall, there should only be good news ahead for the company, he said.
Cramer told a viewer that he'd recommend
for its dividend yield in a retirement portolio, but only if it's less than 20% of the total value.
Cramer was bullish on
First Niagara Financial
He was bearish on
Energy Conversion Devices
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At the time of publication, Cramer was long Goldman Sachs.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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