Cramer's Mad Money - Is Cerberus a Hero or a Dog (12/23/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday December 23.

Cramer’s Outrage: Why Praise Cerberus?

Cramer took issue with the Wall Street Journal’s praise of Cerberus for “risking” its capital to buy Chrysler last year. Cramer wonders what was so heroic about this move which was done to make a lot of money from firing people. It was Cerberus that was insisting everything was fine at Chrysler while the company was sinking, and if Cerberus is so heroic, why doesn’t it bail out Chrysler itself instead of begging for the government to clean up the mess? Of the Big Three, Chrysler should not receive government funds, according to Cramer, because the U.S. doesn’t really need three major auto companies and because 20% of the company is German owned; why should U.S. taxpayers money be going to a foreign company; "Why don't we just send some money Volkswagen's way while we're at it?" asks Cramer. So what if Cerberus loses the nearly $8 billion it spent for Chrysler, vented Cramer, especially since it made $800 million from the takeover. What’s even worse, said Cramer is that the Wall Street Journal has the audacity to praise them.

Caterpillar (CAT), Nucor (NUE), U.S.Steel (X), Apple (AAPL), PG (PG), Fedex (FDX) , Exxon (XOM), JP Morgan (JPM), Citigroup (C), Bank of America (BAC), Goldman Sachs (GS)

While it is sometimes good to be a contrarian, there are times when the majority is right. As “smart” money managers try to tell a stock-weary public to be bullish, Cramer tells investors to trust their instincts. “This is a range-bound market,” he says, “you’d have to be a fool to let it get your hopes up.” Just as the “experts” are calling “bottoms” in such pummeled stocks as Caterpillar, Nucor and U.S. Steel, Cramer notes these were at artificially high levels to begin with and investors may get “pulverized if they buy aggressively.” There are no safe havens in this market; after an up week, Apple was “slaughtered,” PG opened high and was shot out of the sky and while FedEx has risen a bit, but it has a history of giving back its gains. Fertilizers stocks..well…stink, and in most sectors, “every rally is met with a cascade of selling.” Exxon is now a "totally manipulated S&P 500 name that has nothing to do with oil." Financials must lead us out of the present morass, and there is no reason to be sanguine until gains are seen for JP Morgan, Citigroup, Bank of American and Goldman Sachs.

All About Dividends

Dividends “put money right into your pocket” while investors wait for an economic storm to pass. When buying dividends, many investors get confused by the terminology concerning dates. Two commonly discussed dates are the ex-date (the first date a stock trades without the right to a quarterly dividend) and the record date (two trading days after the ex-date when the trade settles and appears on the brokerage records.) Cramer would add a third date, a “must-own date” which is the cut-off day when you buy a stock and still receive a dividend payment for the quarter. Cramer’s advice: don’t worry about the ex-date or the record date, but pay attention to the must-own date when buying a dividend stock.

Suburban Propane Partners (SPH)

A good way to make money off of freezing temperatures is to buy Suburban Propane Partners, a Master Limited Partnership which is required to share its profits with shareholders. While propane is down, it is more stable than gas or alternative energy stocks and Suburban Propane yields over 10%. The dividend is safe, the cash flow is expected to be $4 million in 2009 and its balance sheet is clean. The company also has a wide profit margin.

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Comments

[msoori:]

Cerberus is named for the mythological three-headed dog, and is certainly a dog, and it shows. Recently CNN ran a story about closing of the Mervyn's dept stores in CA, where Cerberus has played a shameful role in it. Not only that, Cerberus hired the CEO that Home Depot fired www.msnbc.msn.com/id/1.../ for poor performance. Cerberus certainly got into this mess themselves. Its a shame that tax payer money is being to bail out a shameful company like this.

2008 Dec 24 10:59 AM

[User 283977:]

Cerberus has capital, and Chrysler is not a public company. If Chrysler needs capital, it should come from Cerberus, not from US taxpayers.

The Wall Street Journal is one of the primary mouth pieces for the big moneyed investment firms. Their praise of Cerberus for "risking its capital" to buy Chrysler clearly demonstrates their biased perspective. They make it sound like Cerberus "rescued" Chrysler because they are great guys and therefore deserve access to taxpayers money. However, you can be sure that Cerberus acted in its own self interests in the matter. They made a quick short-term profit, but now they face the long-term consequences of their bad deal.

Chrysler is owned by Cerberus. Therefore, tax payer money would be going to Cerberus. I don't believe Cerberus is qualified to receive tax payer money… These greedy dogs are just scratching at the door for handouts…

2008 Dec 24 04:35 PM

[jackooo:]

Congress has no clue..........

2008 Dec 24 04:43 PM

[auto44:]

Dividends don't help anything if the stock price is declining at at higher precentage than the dividend rate. If you started doing this when Jimbo started telling you to, you would be in hot water, I remember him pressing us strongly to buy Bear Stearns just a couple of days before it collapsed. Crammer is getting stale.I think his shelf life has expired.

2008 Dec 24 10:08 PM

[auto44:]

To msoori,
Becareful about anything you read or hear from cnn or any other mainsteam news. They always-----(always) have a political agenda. They are very effective at using their readers and listeners as dupes.

2008 Dec 24 10:13 PM

[ace22:]

How do u determin what the must own date is?

Jan 05 01:53 PM