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NEW YORK (TheStreet) -- Has Jim Cramer become too bearish on stocks? Has he gotten too negative? Those were the questions he pondered on Mad Money Monday as he recapped the day's merger and acquisition news.
Cramer reminded viewers that every stock has two prices: the one the market gives it and the one other companies are willing to pay to acquire it. Those prices are becoming less in sync, Cramer continued. Tyson Foods (TSN) - Get Report is now willing to pay $63 a share for Hillshire Brands (HSH) , a 70% premium from where the stock traded just a few weeks ago.
When Cramer featured Hillshire as a potential breakup story a few months ago, he valued the company at a mere $40 a share. Today's news made Cramer question Friday's feature on Kraft Foods (KRFT) and the valuations of its many brands, he said.
But it's not just the food stocks. Merck (MRK) - Get Report announced that it's paying $24.50 for Idenix Pharmaceuticals (IDIX) , a stock that traded at a mere $7 a share. Analog Devices (ADI) - Get Report is paying up big for Hittite Microwave (HITT) , another under-the-radar stock.
Then there's activist investor Carl Icahn taking a stake in Family Dollar (FDO) , sending those shares up 13%. Cramer said Family Dollar is far from best-of-breed.
But with all this activity, Cramer said it's clear the true valuations of these companies are a lot more than the markets are willing to pay, which means it's time to go back to the drawing board to figure out what they're really worth in today's environment.
Executive Decision: Jonathan Bush
For his "Executive Decision" segment, Cramer sat down with Jonathan Bush, chairman, president and CEO of Athenahealth (ATHN) - Get Report, the electronic health records company whose stock has become a battleground of late, falling from $204 to $128 a share after activist investor David Einhorn made negative comments about the company.
Bush addressed the controversy against Athena by referencing his book, Where Does It Hurt?, which looks in depth at the battle between the new cloud-based software model for health care versus the entrenched enterprise software model. He said the old model shows a lack of enthusiasm and courage, and in a 21st century health care model systems need to be connected and patients need to be able to shop around and easily get their data from place to place.
When asked about Athena's business, Bush said his goal is to generate higher gross margins on all their products every year. He said some years Athena has grown over 30% a year, other years slightly less. But the opportunity is there for significant long-term growth.
Cramer said he encouraged viewers to read Bush's book and see why the established players are battling it out with Athena over the future of the health care industry.
Invest Like Carl Icahn
Has activist investor Carl Icahn lost his mind by buying a 9.4% stake in Family Dollar, the worst dollar store around with a chronic inability to execute and a challenged CEO? Not at all, because where the markets see failure activists see opportunities.
Cramer said while it's true Family Dollar falls short on every metric that matters, activists rarely get involved in well-run companies. Instead, activists invest to where they can make a difference. With shares up 13%, Icahn is already making that difference.
So what are Icahn's plans for Family Dollar. Cramer sees three scenarios. First, Icahn can push to take the company private, as Dollar General (DG) - Get Report did, making swift changes, then coming public again a few years later. Cramer said this would be hard to pull off, however, as you need a willing buyer.
Then there's the possibility of a merger. Cramer said consolidation makes a lot of sense as there would be a ton of synergies. Again, you need a willing partner that will be tough to find.
Finally, Cramer said the most likely option is a management shakeup, a move that would be good for both the company and its shareholders, as Family Dollar's current CEO is clearly unable to get the job done. Given today's 13% move in the stock, the market agrees.
Executive Decision: Juan Ramon Alaix
Alaix said Zoetis is investing heavily into research and development to help discover and bring new animal health vaccines to market. He said his company is currently conducting trials for a vaccine that may help stem a current swine outbreak that is affecting the industry.
When asked about the move against antibiotics for animals in Europe, Alaix said about 5% of market is trending toward organic alternatives at the moment, and Zoetis gives people a choice of whether they want to treat ailments with antibiotics or not.
Finally, when asked about the possibility for acquisitions, Alaix noted Zoetis generates a lot of cash and can invest that cash or return it to shareholders. Both options are on the table.
Cramer said he still likes the Zoetis story.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer reminded viewers to never fall in love with their stocks, and certainly don't discount any potentially negative news before fully understanding the facts.
Like it or not, Cramer said the new BMW, and others like it, will eventually represent low-cost competition for Tesla, a fact that is not currently priced into its shares with its cult-like valuations. Yes, Tesla shares are down big from their highs, but never be too blind to ask "what if," Cramer urged viewers.
What if BMW starts taking some of Tesla's market share? Are the shares still worth what they trade for today?
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt
At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.