Cramer's Mad Money - We Lost a Good Man (5/8/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 8.

Cramer's Outrage: Steve Friedman's Resignation

Cramer was incensed that former NY Fed Chairman Steve Friedman was pressured to resign. The former head of Goldman Sachs (GS) made a perfectly open and legal purchase of Goldman shares which now is considered questionable. Cramer thought the purchase was actually a smart way of restoring confidence in financials at a crucial time. "Today we saw why it's not worth it to serve your country....we lost a good man."

And the Rally Continues...Bank of America (BAC), Wells Fargo (WFC), Morgan Stanley (MS), Citigroup (C)

Friday saw another end-of-the-week rally led by banks, tech and oil. Cramer said bears who were worried about a sequel to the Great Depression and sat on the sidelines were still running into stocks, particularly financials, after the stress test indicated just a few banks need to raise capital: Bank of America, Wells Fargo, Morgan Stanley and Citigroup. This might not be the rosiest scenario, but it is definitely preferable to another Lehman-type debacle or nationalization of banks. Raising capital should not be so difficult; Morgan Stanley's equity offering has been a success with a starting price at $22 and a rise to $28.

People's United Financial (PBCT), Bank of America (BAC)

While investors were shunning the financial sector the past couple of years, everyone is grabbing bank stocks, particularly the more popular names. Cramer prefers to hunt for less-well-known bank stocks that can either buy less successful banks or become attractive takeover targets. He thinks it is possible that People's United might resemble Fleet in the 80s after the savings and loan crisis; Fleet made some fantastic acquisitions, including Norstar and was finally bought by Bank of America. Fortunate Fleet stock holders saw a 500% upside. The fact that People's United has the "good problem" of having too much capital (with a tangible capital to asset ratio of 19.5% compared to the industry average of 6%) puts it in an excellent position to buy failing banks. In the meantime, investors can get paid to wait with People's United's 3.75% dividend.

Tech Spec: Starent Technology (STAR)

Starent doesn't seem so speculative at first glance; it has a 30% growth rate, beat estimates by 6 cents last quarter, has an up to 80% share in the CDMA network technology market, is flush with cash, has no debt, great clients like Verizon and AT&T as well as plans to expand into China. However, Cramer says he might be worried about a stock trading at a 26% multiple, but given the 30% growth rate, it isn't too high to buy. He also pointed to the fact that Starent reached its 52-week high on Tuesday, a feat few other companies have accomplished. So even though Starent has had a good run, it should go higher, according to Cramer.

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Comments

[ebschor:]

Now if we could just lose Cramer...

May 10 08:01 AM

[jmward22:]

Ditto

May 10 08:36 AM

[Ranger:]

No. We lost a piece of consummate garbage. Not as big a piece of garbage as Cramer. Still....

May 10 11:32 AM

[BerkeleyBob:]

Maybe Friedman is a good man, maybe Geithner is a good man but both seem to lack any sensitivity to the smell test. There has been an era of self-dealing, bizarre and delusional self-justification (Greenberg and Mozilo) and rampant greed. There appears to be a social and political reaction to the past excesses. I do not subscribe to Victorian prudishness or unrealistic standards of probity by our financial elite, but the applicable standard is the appearance of impropriety. Both failed the test, Geithner got a pass he did not deserve, no matter how much the country "needs" him.

May 10 01:05 PM

[silencedogood:]

All right smartass so Cramer goes away....your nomination for a replacement will need to have the nuts to have an opinion (and tell you that it is an opinion), speak out against greed and abuse, entertain (room to improve here) educate and enlighten outsiders on the risks and rewards of playing in what many off wall street consider an insiders game...the presumption across the country is Cramers critics are all insiders who have a vested interest in continuing to make this industry difficult to understand and make the uninformed vulnerable to the insiders and gatekeepers…

Like it or not, this guy is the only voice many viewers trust for knowledgeable information before they invest in and play the markets….. your nominee to replace Cramer is:








On May 10 08:01 AM ebschor wrote:

> Now if we could just lose Cramer...

May 10 04:33 PM

[notsosmart:]

peter griffin

May 10 07:10 PM

[rogerk2:]

The problem is, Geithner and the rest of them CREATED the financial meltdown, by lax oversight and ineffective (or no) regulation. Hiring these same crooks to clean up their mess is adding insult to injury.

Cramer's job is to get eyeballs for CNBC. More people watch the show if he's pitching stocks to go up, not down. His job is to make people think "there's always a bull market out there some where" so they'll keep watching his show (and the advertisements that support CNBC).

May 11 04:43 AM

[Jonathan Ch...:]

Can we stop this blame game? Who is to blame for the financial meltdown? We all are. Americans voted for the politicians that supported lower regulation, lower interest rates, unsustainable mortgages, coal-fired instead of nuclear fired power plants, taxes that favor cars instead of railroads, criminalization fo drugs such as alcohol, marijuana, opiates. (oops, I guess we decided that alcohol is OK after all - though it is implicated in most auto accidents and related deaths). We have created a situation that has led to on in three blacks having a criminal record, and the HIGHEST IN THE WORLD prison population. (America leads the way?)

SO: Stop with the blaming. Understand what we have and figure ways out.

May 11 08:55 AM

[bgbrown125:]

You know it is pretty simple for those of you that dislike Cramer......Don't watch the show or listen to him. Kind of like not eating a food you dislike - just don't do it.

May 11 09:57 AM

[alajac:]

Jonathan: we just need to change the system, details are on the "alajac" page at u4prez.com, but essentially we need to replace the Federal Reserve system with "ourselves", replace Fed dollars with debt-free US Govt dollars, compensate EVERY legal resident $1000 per month for the government's abrogation of their right to free access to land (see Tom Paine's "Agrarian Justice" plan for argumentation), get rid of ALL personal and corporate welfare and subsidy schemes, get rid of ALL Federal income-based taxation, and drain off excess dollars with a less-than-one-percent, automatically-collected "infrastructure maintenance fee" on any-and-all ELECTRONIC transactions (cash and barter get a pass), and admit other countries as U.S. states if they apply (as we did Texas). Those steps will handle just about EVERYTHING: unemployment, poverty, credit crisis, most crime, homeless vets, end of the FDA and the anti-drug laws (as both are corporate welfare schemes), war, wealth mal-distribution (given enough time, as the "infrastructure maintenance fee" is a de facto tax on accumulated wealth), over-population (by removing the incentive that capital-poor people have to breed their own free labor force), etc. etc. etc.

May 11 01:49 PM