Jim Cramer: In the Abstract, the Shorts May Be Right

NEW YORK (Real Money) -- A couple of years ago, I did a piece on Questcor Pharma (QCOR) for Mad Money, saying that it had been one of the greatest stocks since the show had started, and that it was the only real penny stock that had taken off to levels I had never thought possible. It was a 50 cent stock that had gone to the $50s. Not only that, but I said that the company's main drug, Acthar -- some would say its only drug -- seemed to be capable of aiding people with many different illnesses. I said Acthar could treat 19 indications in all, including some difficult rheumatology indications.

No sooner did I write this up than I was bombarded by Questcor shorts who told me I didn't know what I was talking about. Really powerful short-sellers told me the whole company was a fraud. A research outfit, Citron, had said Questcor wouldn't be reimbursed for more than minimal use for Acthar. The world caved in, and I was mortified that I thought as much of Acthar as I did.

Then, when Questcor announced that it was being investigated by the feds for improper marketing and the stock dropped to $18, I just was blown away about how I could be so wrong about one drug.

Now, to listen to those same shorts, you'd hear someone else has been fooled by Questcor. This time it's Mallinckrodt (MNK), the terrific spinoff of Covidien (COV) that has a growing generic franchise and is a maker of pretty much every major controlled substance out there, from morphine to methadone to oxycodone.

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