Cramer's 'Mad Money' Recap: Valuing Co.'s vs. CEOs (Final)

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NEW YORK ( TheStreet) -- Investing in stocks is about making money, or at least it should be. That's what Jim Cramer told his "Mad Money" TV show viewers Wednesday, as he reminded them that investing in a company is investing in the enterprise and not just in its CEO.

Cramer was responding to the news that billionaire investor Warren Buffett was diagnosed with prostate cancer, along with the precarious dip in the shares of his company, Berkshire Hathaway ( BRKB). He said that for many investors, Berkshire is Buffett and vice versa, but that should not be the case. Berkshire has been the steward of many assets, said Cramer, and that won't change if Buffett were to leave. In fact, Cramer said there's a case to be made that Buffett's hands-off management style may be doing some of Berkshire's assets a disservice and would be better served under different eyes.

Cramer said separating a company from its CEO can be difficult. At Facebook, which is hoping to become publicly traded soon, CEO Mark Zuckerberg recently made a $1 billion acquisition of photo-sharing app Instagram without consulting Facebook's board of directors. Does that make Cramer less-likely to want to get in on Facebook's IPO? That depends on one thing, he said, whether it will make money.

Cramer said the ultimate goal of investing is always to make money. So if the Facebook IPO is priced to make shareholders money, Cramer wants in, if not, then he doesn't. As for Berkshire Hathaway, Cramer said that the company still has great assets, assets that will perform well with or without Buffett at the helm.

Then there's the case of Chesapeake Energy ( CHK) and its CEO Aubrey McClendon. Back in 2008, McClendon used margin to buy up shares of Chesapeake, an ill-timed investment that cost the company big time. Now it was announced that McClendon again borrowed money, this time for an unrelated acquisition. Cramer questioned whether this move was in the best interest of Chesapeake shareholders. If Chesapeake were making money, he said frankly, then he wouldn't care. But since Chesapeake has been struggling, he's deeply concerned.

If a company is making money, then the antics of its CEO don't really matter, Cramer concluded, but if a company isn't making money, then its CEO matters a whole lot more.

Executive Decision

In the "Executive Decision" segment, Cramer once again welcomed Don Wood, president and CEO of Federal Realty Investment Trust ( FRT), a real estate investment trust that's returned 100%, including reinvested dividends, since Cramer first got behind the company in May 2009.

Wood explained that while there are always challenges for retailers, he's never been more optimistic about the future. He said one of the keys to success in the real estate business is being diversified and being in the right places. He said that customers don't always want a commodity when they shop, sometimes they want service and an experience, which is what local retailers offer.

Wood also said that Federal Realty has excellent visibility for growth over the next few years. He said that the company has $1 billion of capital committed to acquisitions and two new projects in Boston and outside of Washington, DC. Wood said the DC market, in particular, has been very strong for Federal Realty, as is California, where technology is making a comeback in a big way.

Finally when asked about the company's dividend, Wood noted that Federal Realty has been paying a dividend for 44 years and he doesn't see anything in the future that would put the dividend in jeopardy.

In the second "Executive Decision" segment, Cramer spoke with Scott Wine, CEO of Polaris Industries ( PII), makers of snowmobiles and off-road vehicles. Shares of Polaris are up 25% since Cramer last featured the discretionary products maker in January.

Wine credited innovation for Polaris' success, saying that his company is now hitting the market with a wide range of products at many different price points. He said the company now employs more than 1,500 people.

But Polaris is a lot more than just snowmobiles and off-road vehicles; the company also has a growing military component. Wines explained that in areas like Iraq and Afghanistan, it's better to avoid the hazards on main roads, which makes Polaris' vehicles the perfect choice for getting troops where they need to go.

Polaris also has growth in its fledgling motorcycle division and in apparel and accessories, a segment that Wines noted gives the company its highest margins. Polaris currently derives 15% of its sales from outside the U.S., below the company's previously disclosed target of 30%. Wines said this was partially due to a pickup in sales here in the U.S., so he's not too worried.

Cramer reiterated his support for Polaris.

Am I Diversified?

Cramer spoke with callers and answered tweets @JimCramer to see if their portfolios have what it takes for today's markets. The first tweeter's portfolio included Hewlett Packard ( HPQ), Red Hat ( RHT), Starbucks ( SBUX), SBA Communications ( SBAC) and Cisco Systems ( CSCO).

Cramer said that Cisco, Red Hat and HP are all tech. He advised selling Cisco in favor of Abbott Labs ( ABT) and Hewlett Packard in favor of Ensco ( ESV).

The second caller's top holdings included Abbott Labs ( ABT), Kraft Foods ( KFT), Conoco-Phillips ( COP), Windstream ( WIN) and Mattel ( MAT).

Cramer said this portfolio was properly diversified.

The third caller had Devon Energy ( DVN), EOG Resources ( EOG), Las Vegas Sands ( LVS), SunTrust Bank ( STI) and Statoil ( STO) as their top five stocks.

Cramer identified three-of-a-kind in the oil patch and advised selling Devon and Statoil and picking up Verizon ( VZ) and Abbott Labs ( ABT).

The fourth caller's top stocks were Conoco-Phillips ( COP), El Paso ( EP), Procter & Gamble ( PG), UnitedHealth Solutions ( UNH) and Waste Management ( WM).

Cramer once again identified too much oil in this portfolio and again advised adding some Verizon ( VZ) to replace El Paso.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer told viewers to cut IBM ( IBM) (a stock which he owns for his charitable trust Action Alerts PLUS) and Intel ( INTC) some slack. He said both companies deserve the benefit of the doubt.

Cramer acknowledged that IBM missed revenue targets, but noted that the company still made its earnings number and is still not an expensive stock. He said the stock will rest for a little before resuming higher.

Intel is a little more complicated, said Cramer. A disk drive shortage hampered PC sales last quarter, but Microsoft's ( MSFT) new Windows 8 will drive a lot of sales in 2012. Intel is also opening new plants that will pressure gross margins, but that too will be overcome soon.

In both cases, Cramer said these companies are adjusting to get it right and after years of proving that they know what they're doing, deserve the benefit of the doubt.

Lightning Round

In the Lightning Round, Cramer was bullish on
American Water Works ( AWK),
Orbitz Worldwide ( OWW),
Ocwen Financial ( OCN),
Las Vegas Sands ( LVS),
Wynn Resorts ( WYNN),
Kulicke & Soffa Industries ( KLIC),
MeadWestvaco ( MWV),
Nordic American Tanker ( NAT),
Solar Capital ( SLRC)
and Annaly Capital ( NLY).

Cramer was bearish on Frontline ( FRO)
and MIPS Technologies ( MIPS).

--Written by Scott Rutt in Washington, D.C.

To contact the writer of this article, click here: Scott Rutt.

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At the time of publication, Cramer's Action Alerts PLUS was long AAPL.

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."

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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.

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