Jim Cramer's Best Blogs

NEW YORK ( TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
  • Herbalife's secret weapon;
  • Bill Ackman's losing battle; and
  • takeovers in the bank patch.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.


Herbalife's Secret Weapon

Posted at 3:15 p.m. EDT on Friday, Feb. 15

Take Ackman out of the equation. Take Icahn out of the equation. Take Loeb out of the equation.

Where does that leave Herbalife ( HLF)?

How about as an international company that is doing well -- well enough that it could leave the 20% of its business that is in the U.S. and still do great.

Isn't that the ultimate weapon against the shorts?

Isn't that the ultimate unimpaired earning power of HLF?

When Bill Ackman says that HLF belongs at zero that means he thinks the U.S. regulators -- some regulators, we aren't sure -- are just going to shut it down. They will do that, he believes, because he is smarter than they are, wiser, and more caring than they are. They will do it, he believes, because he has done all of their work for them and they just have to issue the edict.

But how about HLF? Does it have to stand by the edict? What happens if it takes one of the least profitable of its businesses, the U.S, and simply walks away from it?

That's the ultimate challenge to Ackman. Herbalife is barely a U.S. company.

Now, I know that Carl Icahn and Dan Loeb like it, and I sure wish that they would say. "We have checked this company up and down with our lawyers, former Federal Trade Commission lawyers, and lawyers who worked with other direct sale schemes, and Michael Johnson and his team are pristine."

But I think the far more important concern is that the U.S. is not the engine here, so the U.S. cannot pull HLF down as much as Ackman needs a U.S. entity to try to do so. He can't buy one. He can't give enough money to senators and congressmen to shut it down. If he thought he could get a temporary restraining order against HLF, he would have tried already.

As always, I am not advocating that you buy this stock or sell it. Because the issue isn't HLF itself, it's the egos involved.

If, however, the issue ultimately becomes HLF, then the solution is an offshore one and I think it will work out just fine. Some earnings impairment from the U.S., and then off to the races to play again.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.


Looks Like Ackman Has Lost This Battle

Posted at 7:00 a.m. EDT on Friday, Feb. 15

OK, let's say you are the U.S. government. You are the Federal Trade Commission. You are the Securities and Exchange Commission. You are the Justice Department. Are you going to, based on a hedge fund manager's say-so, shut down a company because this person says it is a criminal enterprise? Or are you going to take a look at the records of Dan Loeb and Carl Icahn and say, "You know what? They've done a lot of work.

Let's just let the market decide whether Herbalife ( HLF) lives or dies. It ain't dead yet, and these two investors say Herbalife is fine, and everyone recognizes these investors as being shrewd, with staffs that far exceed the ken of the government, and they own about 20% of the darned thing. So who are we to put it out of business?"

Does anyone really want an Arthur Andersen on their hands, that infamous Justice Department case in which a stroke of a pen wiped out tens of thousands of jobs?

Furthermore, is Bill Ackman a good stand-in for the government? Is it worth backing a hedge fund manager who has decided to wipe out a company? Is that a stand for the ages? Does that get you votes?

Hence, the odd state of a company that someone needs out of business, while two others just need to sit down and talk about how $5 billion can be found to take the company private.

And all it has to be is talk.

Icahn and Loeb know two things. One: Herbalife has a pristine balance sheet that has been very successful at generating worldwide profit. If it wanted to do so, it could move offshore -- move to Mexico -- and become a huge player in a growth economy. Two: The issue with shorting is that stocks can go to infinity. They stop at zero but they can go to infinity.

So we have a situation in which a company can now be bought because of two managers who are very smart are buying it, and are legitimizing it, or re-legitimizing it, right before our eyes.

Plus, we now know why Icahn was cruel to Judge Scott Wapner, the terrific host of " Fast Money's Halftime Report" on CNBC. Icahn couldn't talk about it because he was accumulating it.

Now, I am sure there are plenty of people who love Bill Ackman. I am sure 100% that his partners will back him no matter what. I am certain that he believes the Nobel Prize for Economics awaits him and that President Obama is itching to give him the Medal of Freedom.

In the interim, as Stalin once asked of the Pope, how many divisions does he have? 'Cause I can tell you, Icahn and Loeb? They've got a lot of divisions. In this game, he who has the most divisions wins.

Random musings: Don't forget to watch my pal Scott Wapner's take on Carl Icahn for Round Two of Herbalife, maybe with an empty chair for future Nobel laureate Ackman?


Takeovers Galore in the Bank Patch

Posted at 7:00 a.m. EDT on Friday, Feb. 14

Have you ever seen a more downgraded group than the banks? Yet they won't quit. I count downgraded bank after downgraded bank. Yet it's such a silly call to do so because we are about to see real lending in this country and when that happens the whole focus on net interest margin will go away. The new focus will be on takeovers as book values are scrubbed clean and new colossuses can be built.

Consider the case of HomeStreet Bank ( HMST), one of the best-performing IPOs from last year and a hungry regional bank with a book value that is 20% below its stock price.

When you have banks that are trading north of book value and banks trading south of book value it can often be immediately accretive for the expensive bank to buy the cheaper one.

The biggest bank that sells at a premium is Wells Fargo ( WFC) and it owns more than 30% of the mortgage market. So that won't happen.

But a bank like HomeStreet can start doing fill-in acquisitions.

I am more interested in banks like First Horizon ( FHN), Key ( KEY), Synovus ( SNV) and Regions ( RF). These are all banks that were hobbled during the great recession and are scrubbed clean, but have not yet turned on the lending jets as HomeStreet has. Remember the economics of banks. Net interest margins go down if banks just sit on the cash. They can go up if the banks lend and if interest rates go higher those loans can reset.

So, let's take a bank like Regions. It could provide a terrific buy for Comerica ( CMA) or PNC ( PNC), banks that need to start expanding again lest they continue to fall out of favor with the analysts even as they do not come down on the myriad downgrades. I know the Street has turned on KEY, an Action Alerts PLUS name, but there's so much that the bank can do to bring out value, including sell its considerable Northwest franchise to HomeStreet. Of course, BB&T ( BBT) can turn around and buy First Horizon tomorrow.

One other thing to keep in mind. BBVA ( BBVA) owns a remarkable franchise in Compass, which has filled a banking vacuum as you can see from Morgan Stanley's timely upgrade this morning. BBVA remains a terrific stock to own as a way to play the rebound in Spain, but it can also afford to acquire First Horizon or Synovus or Regions and get that growth going. Banco Santander would like to spin off its U.S. business to raise cash and it, too, is a natural acquirer.

As the financial hit four-year highs the signs are clear. More lending's coming, so the banks that were passed by as Wells Fargo bulked up are now ready to acquire and be acquired. The fact that Key or First Horizon has not been nicked even by multiple downgrades speaks volumes for what is about to occur.

Takeovers galore in the bank patch. A necessity and an opportunity.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long KEY.

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