The Sound of the Short Squeeze

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Squeeze!

Nothing feels worse than that noose around your neck, that noose of the bad short, when the world changes for the better. Take

Colgate

(CL) - Get Report

. I love this stock, but for the longest time it has become the hedge funds' favorite whipping boy because it has so much of its growth based on emerging markets around the world.

I got long Colgate after my Dad convinced me to switch to

Total

toothpaste. I bought puts against it when all of this ugliness started, but I kept the position on.

Going into this week, when Colgate reported, I was prepared for the worst. Sure enough, the number came out, and it showed very little top-line growth. Ah hah, I thought, the bears are going to be right. Maybe they will take this to pieces. After all, hadn't they done the same to

(PG) - Get Report

PG,

(KO) - Get Report

KO and

(G) - Get Report

G? But this conference call with management was a thing of beauty. As I listened I could feel the short-sellers' collective pain. Colgate was not about to blow up.

The analysts obviously didn't want to admit it. They were skeptical on the call, in disbelief that Colgate hadn't blown up in Mexico, or Russia, or Brazil, or East Asia. But they didn't count on this Total being such a huge hit. And they didn't count on Colgate being able to manage its business as well as it did.

The stock vaulted seven points in less than a day, even though no one upgraded and a couple of people cut numbers.

It vaulted because those who were short it had nothing to hold on to after this quarter. Colgate had not blown up. It did not disappoint. It did not lower expectations. It raised them.

Sometimes, in a tape like this, with a heavily shorted name like Colgate, that's all you needed to know to pick up seven points. I admit that at the end of the day Friday, caught up in the gleeful madness of the moment, I offered my Colgate at the outrageous price of $86, when the stock was $84.75. Someone took me right at the bell.

Easy money? Hardly. In fact, everything said my trade would be a loser. Not a single analyst whom I talked to endorsed it. But in crazy tapes like this one, where hedge funds congregate around the same shorts, you can bet that if nothing goes wrong, that is better than an upgrade. The sound you hear when Colgate goes from $78 to $86 is the sound of the short-sellers yelling squeeze as the noose tightens and the game ends.

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to TheStreet.com at

letters@thestreet.com.