"The stock market is seeing a number of companies make multibillion dollar acquisitions, mergers and leveraged buyouts," Jim Cramer told his
"RealMoney" radio show listeners Monday. "We have to talk about it because there's lots of ways to win."
He said that he generally likes consolidation because it is much easier for companies to win as competitors disappear. Plus, the remaining players get revalued upwards and are worth more, since they'll do better in an environment with less competition.
Buy the companies that benefit from the consolidation, Cramer said.
He began in banking with news that
is striking West by purchasing
( GDW) for $25 billion. This will extend the bank's business to mortgages and make it more of a national bank, said Cramer.
Now that Golden West is out of the game, he said to take a look at
, the next-cheapest bank stock. Cramer said that it's not a great bank, but that it's a "great customer bank."
He also to look at
Accredited Home Lenders
( LEND), which he believes has the best loan management.
In health care, the two largest scientific tool companies --
( FSH) and
-- are merging in a $10.6 billion deal. Together, the companies will be the primary supplier of goods and services to academic and government scientific labs.
He said to look at
, which are also in the business of laboratory tools and technologies.
Consolidation is brewing in minerals, too, he said.
has put in a $16 billion bid for
, the largest maker of nickel in the world. The deal is contingent upon Inco scuttling its takeover of Canadian miner,
Cramer said that investors could jump into the fray and start buying Inco or Falconbridge, but that he would take a look at
. The company, which he owns for his
ActionAlerts PLUS charitable trust portfolio, is involved in iron ore, nickel and copper.
Everyone wants to buy and sell at the right price, Cramer said. So, he identified one moment when you can be pretty sure that you'll get in low and the stock will run higher: the secondary stock sale.
For example, he said that many investors have watched the sickening slide of
stock, which has dropped almost ever since it came public.
It's a blue-chip name and a well-run company, so people have been waiting for the slide to end and for an entry point. Cramer said that the entry point happened with the secondary sale.
Lots of insiders want to have an event where they can raise some cash, particularly if they've been sitting on a stock for a long time, he said. So, they hold a secondary stock sale.
In the case of NYSE, insiders agreed to sell the stock at $61, even though the stock was trading around $75 when they said they would hold a sale.
The stock slid further on the sale news, but then it immediately bounced back to where it was when the sale was announced, trading just around $74.
You need to be in these giveaways, Cramer said, pointing out that
insiders have announced that they want to diversify and sell some of the stock.
He added that this is a good company, and that he owns the stock for
Don't Buy, Don't Buy ... All at Once
There are many lessons Cramer has learned while working on Wall Street, and he's boiled them down to what he calls the "10 Commandments of Trading."
This week, he told listeners about his third commandment, "Don't Buy All At Once."
"There's a temptation out there everyone falls prey to ... it's blowing your wad while buying a stock," he said. "When you're emotionally invested in a purchase, you want everyone to know what a genius you are when you're buying."
But Cramer said that no investor is infallible and that it's impossible to always get in and out at the most optimal levels.
That's why he said it's best to scale in and scale out of a stock, meaning that it's best to buy and sell a stock in pieces.
When commissions were high, investors didn't have this option, he said. But now that commissions have come down, it's possible to buy 100 shares of a stock in 25-share increments.
Jim Cramer told his first caller that now is not the time for him to buy more
Las Vegas Sands
The caller bought the stock in the low-$50s, and the stock is now in the low-$70s. Cramer said that he would take a quarter of his position off the table and lock in a profit. "Word is out that Macau is producing some fabulous returns for the company," Cramer said. "Once the good news is out, we want to be more inclined to sell ... We need to recognize that when other people have heard the good news, it's later than we like."
Cramer also said that stocks like
( TRB) and
New York Times
are "coiled springs."
These stocks have been stuck for a long time at a particular level, and then they suddenly move up, he said.
The tendency is to say that they've been stuck and that now they're finally moving higher it's time to ring the register and make some money, Cramer said. But that would be wrong.
Once unstuck, Cramer said that Tribune could run higher for 3 or 4 points, so he wouldn't cash in yet. Let it go to $31 or $32, and then move on to better pastures, he said, adding that he likes Internet more than newspaper stocks.
A caller said that he had 101 shares of
, and that he took 25 shares off the table because the stock has moved up significantly.
Cramer said that this was the right thing to do, and that he would even be inclined to take another 25 shares off. He mentioned that David A. Brandon, the chief executive of the company, had appeared on his "Mad Money" television show a few weeks ago. During
that appearance, "
Brandon did a compelling job explaining why the company's long-term forecast could be great," Cramer said.
But even though international business could help over a longer period of time, Cramer said that he was not blown away by the company's most recent quarter.
Cramer told a listener that he would wait for
to fall below $30 before buying the stock.
He pointed out that the largest bank in Columbia has weathered the saber-rattling of surrounding socialist governments, but that things were still unsure enough in Peru that he would wait and enter Bancolombia at a lower price.
He said the only Latin American bank he is currently embracing is
He said that now is a great entry point for
and that he would put on half a position here. "Hope it goes below $4, but it probably won't," he said.
A listener sent Cramer an email asking whether he has identified the next Will Danoff, who manages the
Fidelity Contrafund. Cramer has long said that it's the fund to buy because Danoff is the best manager around, but Contrafund has closed its doors.
Cramer told the listener that he has two new fund picks, although both of them have fees that are higher than the fees for Contrafund. The net is good and these managers will far exceed their benchmarks, he said.
He said he likes Richie Freeman, who manages the
SmithBarney Aggressive Growth fund, and Rich Pzena, who runs the
John Hancock Classic Value Fund.
A caller said that he owns
, which owns American Airlines, and that he got it for about $5. Cramer said not to sell it all at once, but that it's time to start taking some off the table.
"You have benefited greatly by a reevaluation of the airlines," Cramer said.
And even though Cramer has liked
Alon USA Energy
since it was at $21, he said that he cannot sanction buying any more until it pulls back to $30.
At the time of publication, Cramer was long TD Ameritrade and BHP Billiton.
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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