Waiting for the Smoke to Clear

When a deal is canceled, don't be too fast to make a move.
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When deals get canceled, there is a "hipbone connected to the legbone" kind of logic that comes into play and makes it hot for a ton of other stocks.

Last night,

DSL Net

pulled its $115 million stock offering because of unfavorable market conditions. DSL was going to take the money to expand its high-speed Internet-access business.

At our firm, the first thing we think of when we see these things is, Who won't get that money? A certain amount of the money was going to go to advertising, but a lot of it would have gone to companies like

Redback

(RBAK)

and

Copper Mountain

(CMTN)

.

These are two red-hot companies that are doing terrifically and have held up extremely well. I don't even know for certain whether they would have seen a dime from DSL if DSL had gotten the money. But we are in a "shoot first, ask questions later" market. That means traders will say, I can't wait to find out if these companies are going to lose orders; I have to presume they will and roll out of them to beat the other guy out of Copper Mountain.

Of course, this can be a great opportunity for people who are patient and rational and knowledgeable about the real state of orders. These are investors who don't think in terms of legbone and kneebone. These are fibula and patella people who know what connects which bone to which.

But the thoughtful people don't react to DSL. They make calls, they check it out, they wait for the smoke to clear.

Me? I know both the kneebone and the patella.

I am waiting for the smoke to clear.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. 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 at

jjcletters@thestreet.com.