People keep getting MasterCard ( MA) wrong, Jim Cramer said on TheStreet.com TV's Wall Street Confidential Web video Wednesday. They've been using it as a proxy for American consumer spending, but that is a small part of its story. "The story here is that people worldwide are adopting credit cards," he said. "The credit card is being invented all over, whether it be Southeast Asia, Latin America or Eastern Europe, and MasterCard is the play." This adoption of plastic over paper is really driving the stock, and more than half of the company's business is from overseas, Cramer explained. U.S. consumer spending is a secondary factor. A fifth of the stock is short, and the company is buying back what could possibly be a fifth of the company, Cramer explained. Therefore, "two fifths of the company are going the wrong way, and that's why the stock has gone up 17%," Cramer said. "It's a thin trader to begin with."
Watch Cramer's Riff on MasterCard
Cramer typically doesn't like to recommend stocks because of the shorts having to scramble, because periodically the shorts are going to be right, he said. However, MasterCard is just a classic example of what he said he's seen over and over again in his career, and that is that people don't know what they are shorting.