Cramer's 'Mad Money' Recap: Beating the Hedge Funds at Their Game

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"Believe it or not, a lot of people want this market to go lower," Jim Cramer told the viewers of his "Mad Money" TV show Friday.

He said the big hedge fund managers wanted to break this week's market rally, but the regular investors have won out.

Cramer said there are two types of investors looking for the market to go lower. Big mutual fund managers who are under-invested and need prices lower so that they can jump in, and big hedge fund managers, who make a living shorting the markets and creating havoc.

He said the hedge fund managers were looking for bad news this week. A former hedge fund manager himself, he said he knows how these guys think, and outlined the 10 bits of news these fund managers were hoping not to hear this week.

1. Positive comments from Obama. Hedge funds hated any positive comments about the markets.

2. News about China doing well. Hedge funds want China to remain in the doldrums for awhile longer.

3. Better-than-expected retail sales figures. Hedge funds needed to see a weaker consumer.

4. The uptick rule. Hedge funds are reeling at the thought of the uptick rule being reinstated. (The uptick rule has been covered in depth this week on TheStreet.com, with featured commentary by William Furber and Eric Oberg.)

5. A profitable Bank Of America ( BAC). Hedge funds were hoping for a government takeover, not a solvent entity.

6. A scared Warren Buffett. Instead the famed investor offered some hope for the future.

7. General Electric ( GE), which he also owns for his Action Alerts PLUS portfolio, downgraded hard. Hedge funds wanted the bellwether's ratings slashed big, not small.

8. Analyst downgrades. Funds were looking for more downgrades, but the few upgrades they got instead.

9. An even bigger rally. With a market up even more, there would've likely been a big reversal to capitalize on.

10. No more takeovers. Instead, hedge funds saw takeovers picking up steam, with company after company seizing low prices to make acquisitions.

Since all of these came true, the spiral of bad news has been broken, said Cramer, and the hedge funds will have to change course. And that's why he feels the market could see Dow 8,000 before the rally is over.

Pasta Delight

As the economy weakens, the threat of private label foods outpacing their brand name competitors has never been greater, said Cramer.

In recent weeks, Cramer's recommended both Ralcorp ( RAH) and Treehouse Brands ( THS) as two ways to play this growing trend. Tonight, he added a third, American Italian Pasta ( AIPC).

American Italian Pasta is not only the largest producer of dried pasta in America but also the largest private label pasta maker. Cramer said this combination makes it a huge winner.

Pasta is a cheap alternative for cash strapped consumers, said Cramer, and that's helped propel the stock from $4 to $30 over the last year. Additionally, American Italian Pasta is the sole supplier to Wal-Mart ( WMT), a company's who's making an even bigger push into private label brands later this year.

Cramer said there's lots to love about this stock. The company sells to dollar stores, another growth story. Likewise, the company is benefiting from falling commodity prices, with wheat dropping from $25 a bushel to just $6.75 a bushel currently.

Cramer told viewers to wait for a good entry point in this stock, adding "don't go crazy."

Speculation Friday

Cramer looked at a few of his previous calls to see what's worked and what hasn't.

BankingMyWay

He highlighted CV Therapeutics ( CVTX), a stock he mentioned on June 15, 2007 that's now up 82%, Axsys Technologies ( AXYS), a stock mentioned on Feb. 14 which is crawling back to break even, and GMX Resources ( GMXR), a stock mentioned on Feb. 5, that got clobbered and is down 70%.

Cramer used these examples to show the nature of speculating. "Sometimes you're right, and sometimes you're dead wrong," he said.

For tonight's spec however, Cramer said he's looking at biotech, and at Cougar Biotechnology ( CGRB) in particular.

Cougar is working on a treatment for prostate cancer, a disease that's a grave yard of failed drugs, but Cramer said Cougar's treatment is yielding positive results in its early trials.

Cramer said the company is set to release its next round of results in the second half of 2009, but the company has enough cash to fund itself through 2010. Cougar also has two other drugs in phase-one testing that could also help its prospects.

Cramer cautioned that Cougar is a small company, so investors need to buy slowly and patiently, and use limit orders if they wish to get in.

Mad Mail

Cramer told a viewer that in the battle between Research In Motion ( RIMM) and Apple ( AAPL), Research In Motion has been guiding numbers down, while Apple has been blowing numbers away.

Cramer told a second viewer that he's having a tough time trying to figure out U.S. Steel ( X) and needs to talk to their CEO before he makes a judgement on the company.

Lightning Round

In the Lightning Round, Cramer was bullish on Freeport-McMoRan ( FCX), Joy Global ( JOYG), Accenture ( ACN), Sealed Air ( SEE), Waste Management ( WMI) and Foster Wheeler ( FWLT).

Cramer was bearish on Home Inns & Hotels Management ( HMIN) and Fortune Brands ( FO).

Check out the latest edition of "Cramer's Take on Top-Searched Stocks" on Stockpickr.

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

Read more of Cramer's Mad Money Lightning Round insights.

For "Mad Money" performance statistics and other links, check out Mad Money stats

RealMoney Barometer Poll
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At the time of publication, Cramer was long Foster Wheeler, Freeport McMoRan, General Electric.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.