Jim Cramer fills his blog on
every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week, he blogged on:
- What drives this market;
- M&F Worldwide;
- selling Ameritrade and buying Pru;
- the bankable Goldman; and
- sending a message to Bill Gross.
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, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Three Themes That Drive This Market
Originally published on 6/4/2007 at 12:14 p.m.
We've got three overall themes to this market: takeovers/going private, revaluations and catch-up.
I want to distinguish these themes from the bull sectors -- aerospace, ag, minerals, oil and gas. I want to distinguish them because these themes cut across
Today we are seeing revaluations of a host of stocks:
- General Electric (GE) - Get Report off of a Barron's article that says the stock is at last ready to run
- Wal-Mart (WMT) - Get Report off the upgrades and a decision by management to buy back stock instead of growing uncontrollably
- oil companies, which seem to get revalued upward on a regular basis
- Google's (GOOG) - Get Report being revalued off the notion of failing competition from Yahoo! (YHOO) and Microsoft (MSFT) - Get Report
Each week we get the revaluations. We saw one last week for
off of a conference call. And we saw one for
off the quarter. We are seeing a revaluation of
, which was perceived to be a hurting equity off of the possible dry-up of subprime issuance, but we know now won't be hurt much at all. Plus the leveraged buyout activities, as Merrill says in its upgrade this morning, are causing estimates to move up rather sharply.
Once the revaluations begin they rarely stop. That's because the revaluations then propel the stocks to breakout levels that therefore become self-fulfilling.
Then, once a stock advances, like a Wal-Mart, people see that peers (in this case,
) are cheap and they play catch-up. We are seeing something like that happen right now in the oil and gas plays after the buy of properties by
If your stock can go up off a buy, then it has the ability to move
higher. This process mystifies a lot of people because it causes them to think that the market's leaving them behind. That's why I urge you to recognize that even intraday bad openings, like the one we got today, count as selloffs that can be used to get in, particularly when you see one of these themes.
How would I use this session? Well, if Wal-Mart's up I'd buy some
on the dip (and Sears is still dipping). Or I'd go buy some BUD, which was revalued last week. Or consider buying some
, which is once again falling behind the group.
I have referred to these themes as reminiscent of the 1980s, when we saw revaluations for major American food and drug companies. That period lasted much longer than expected, when
put on billions and billions of market cap.
Now that is happening again to other areas. I just think you have to respect how long that process went on and recognize that it is a relatively new phenomenon that isn't about to end now.
buying aggressively in there everyday and it shows. ... The multiples for
remain way too high. ...
should be up much more on this new Revlimid use.
General Electric owns CNBC, for which Cramer is a featured commentator. At the time of publication, Cramer was long XTO Energy, Sears Holdings and Freeport-McMoRan.
M&F Worldwide: Don't Let a Sleeping Giant Lie
Originally published on 6/5/2007 at 6:59 a.m.
What do you do when you know you have a good idea but you can't really buy it in size? I believe you write it up here and hope that individual investors and small funds can do the work and, perhaps, buy it if they agree.
The stock is
, the Ron Perelman "vehicle," meaning he owns 38.6% of the company. That's neither here nor there. He hasn't done a good job at
, which is a brutal situation. But he has done a very good job shepherding this maker of licorice for tobacco, a key ingredient for tobacco. The stuff also goes into snuff.
In December it bought checkmaker
for $1.7 billion to go with
, which it bought a year before, from
Now, given that there is only one other maker of checks,
, you have a benign duopoly, something that can produce higher prices even in a declining market. We love duopolies because they can rein in dangerous competition that hurts margins.
Perelman clearly recognizes this duopoly. He bought $12 million in stock at $60. The stock's up a little since then, but arguably not enough,
it is up 169% since the beginning of the year. That's because there are only 12 million shares and about 1.5 million are short.
Have you missed it? I would have thought so until I saw the Perelman buy. Now I am thinking this one could be worth a lot more given the duopoly and the short position.
I debated doing this one for "Mad Money" but the amount of trading is so little each day that I thought it was fraught with danger to highlight it. The darned stock could be up way too much
after I suggested limit orders and all sorts of other caveats.
To me the stock could run into $100 after this amazing merger. But buying more than a couple hundred shares almost seems out of the question.
It is rare that I would recommend a stock that has moved this much. But a transformative merger of a sleepy company just may be worth much more than anyone thinks.
I'd buy it here.
At the time of publication, Cramer had no positions in stocks mentioned.
Sell Ameritrade, Buy Pru
Originally published on 6/6/2007 at 8:53 a.m.
At first glance,
have nothing to do with each other. Pru's
getting out of equities, Ameritrade is steeped in them.
But they are two sides of the same coin. Ameritrade is an asset gatherer that does not have research. Pru hasn't gathered enough assets and paid for expensive, top-quality research. And I mean top quality; I love Pru's stuff.
So, one business is unattractive enough that Pru closes it, despite a long history of excellence. No scale. And the other
attracts not one, but two activists who know that Ameritrade can create great scale if it merges with another asset gatherer,
I call them asset gatherers because you just can't make much off of trading, and people are trading at a decreasing rate.
Intriguingly though, I would sell Ameritrade and buy Pru. Here's why:
Ameritrade has now run 5 points even though its last quarter was not that great. If it chooses to do nothing, its stock will go down. Plus I think that Ameritrade is very well run and doing everything it can to bring out value
Pru, on the other hand, shows an endless desire to make money for people, even striking down some idols like research.
They mean business. They are taking no prisoners.
My kind of company.
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At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.
Originally published on 6/7/2007 at 1:10 p.m.
Really getting my wishes here with this down-day stuff. But I am adamant that unless we build up some negativity, we are not going to get where we have to be.
I want to focus on
for a moment. Do you know the last time we had a vicious selloff, the February kind, this stock got pole-axed down to $180.
At that price, it looked as preposterously dangerous and perilous as it does now in the low 220s. It has a real "no bottom" feel. I know from the Answers tab of
www.stockpickr.com people are petrified of the whole group. So many negatives: interest rates going higher, commodity prices going higher, mortgage business not booming, equity issuance slowing down. Trading slowing down.
To which I say, do you really think these are trends that Lloyd Blankfein & Co. can't negotiate? Do you think these aren't already fully discounted in a nine multiple? Do you think that they are really hostage to this kind of activity?
If you do, join the club of nonbelievers who have kept this stock cheap the whole way from $100 to $230.
I would urge you to be buying down on this stock. I told a group of terrific women who are in college or just graduating, as part of a seminar thrown by 85 Broads, a fantastic organization, that they should buy two to three shares of Goldman Sachs. I said buy one here and then pray the bears take it down to the $210s.
Do I think it will get there? Not if the pattern that held true at $190 holds true today.Then why not buy it all at once? Because nobody's that good. Still, I urge you to remember February and how this stock looked.
Cause it is looking that way again 30 points higher.
At the time of publication, Cramer was long Goldman Sachs
Sending Bill Gross a Message
Originally published on 6/8/2007 at 2:32 p.m.
Is this the anti-Bill Gross rally? The rally that says that Bill Gross, who turned bearish after being the biggest bull, didn't merit another 100 points down, and we are making that back.
It's a powerful rally. I know that I wanted another down day. We have not gotten it. Sometimes you just don't get what you want.
My take is, again, that I would like to sell into this rally.
I have, though, checked in with all my usual sources, and everyone is of the same mindset -- it needs to go lower.
Maybe that's why I might be wrong, because we all feel that way.
I have bought only a few stocks here for
Action Alerts PLUS.
Maybe I should have been more aggressive, but without a price break further than we have, I can't take action.
What ignited things?
winning a lawsuit;
running. Both good news. Need more.
At the time of publication, Cramer had no positions in stocks mentioned in this post
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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