Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday November 17.
Land of a Thousand Bull Dances: Lowe's (NYSE:LOW), Fannie Mae (FNM), Freddie Mac (FRE), AIG (NYSE:AIG)
Cramer posed the rhetorical question “Am I too negative?” While he says he would love to go to the “land of a thousand bull dances,” the negatives are too terrible and too numerous and there is not yet a bottom in sight. Lehman has been the only major bankruptcy, and the bailouts are keeping companies from failing completely. However, Cramer still thinks a bailout for GM would be good news. Nothing has been done to deal with the mortgages with the CDOs which are responsible for much of the housing problem. Fannie Mae and Freddie Mac are constantly producing losses and AIG is sucking up taxpayer money and sending it to hedge funds. Lowes is the only stock Cramer has seen in a long time to behave well on bad news, but he isn’t chiming in along with the bull cacophony yet. In the meantime, Cramer told investors to stick with recession resistant names, accidental high-yielders and stocks trading close to cash. Until there is a bottom, an auto bailout or a rate cut in Europe and China, Cramer doesn’t see any reason to be bullish.
Cramer had a “twofer” for his outrage of the day. First, instead of going after the corrupt management at major organizations for costing the economy millions of dollars, the SEC is investigating famous investor Mark Cuban for insider trading. Although Cuban might be guilty, Cramer says there are much greater crimes the SEC could be worrying about.
Cramer’s second outrage of the day was Target, which reported a 24% earnings drop and a hideous 83% decline in its credit card business. Not only was the company’s earnings an outrage, but Cramer has a personal beef with Target. The company harassed him constantly about an alleged balance on his credit card bill, and even threatened to ruin his credit record until he proved to them that Target actually owed him $71.29. “Is that how Target makes its money?” asked Cramer, “Living off the float from guys like me who get talked into paying them when they’re not supposed to?”
Cramer revisited one of his favorite “green” plays which is ironically an oil company. Andarko has fallen from $56.42 to $37, a 33.2% decline (modest compared to declines in other companies). Like many commodities, natural gas has been hit hard, but Cramer and Hackett think the commodity may make a comeback, since it is a clean and plentiful alternative to fossil fuels and may become a “bridge to alternative fuels.” Hackett says the current decline was caused by falling demand and increased drilling, but thinks natural gas may see an upside in winter. Andarko has hedge 95% of its production at $1.50 for 2009 and 70% at $1.25 for 2010. Hackett said Andarko was lucky since it bought some of its properties in 2006 when natural gas was weaker than where it is now and those acquisitions have paid off. Cramer asked if the high prices this summer were due to hedge funds or real market forces, and Hackett responded both were responsible and the market was overbought but now is oversold. When Cramer asked Hackett why the dividend was only 1%, the CEO responded a stock buyback is more efficient for shareholders, and says his company is a long-term value play. While Cramer said he was reluctant to recommend any stock, he said he thinks Andarko could come back.
Cramer recalls Green Week last spring, when oil was roaring up and so were green stocks. Those who didn’t take profits in his picks which surged around 60-70% ended up getting slaughtered as oil fell and green stocks plummeted. Now the green basket of picks has declined. 58%, lower than the S&P 500. What killed green stocks? Falling oil prices and selling by hedge funds. Cramer noted a correlation between green plays and oil prices. In addition, brutal selling by hedge funds brought down natural gas, which faces challenges in the Obama Administration, since the President-elect has come out in favor of ethanol.
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