Jim Cramer is the host of CNBC's "Mad Money" and the chairman of TheStreet.com. In 1987, Cramer started his own hedge fund and returned an average of 24% per year between 1987 and 2001. Cramer also authored six money management books.
John Paulson gained notoriety for betting against sub-prime mortgages. He made $5 billion in 2010 by betting on gold. He started Paulson & Co in 1994. These are the stocks John Paulson and Cramer both love:
Alcoa (AA): Cramer marked it as a buy, especially at $12. This aluminum producer received a buy recommendation from Cramer as he said the cash flow is bountiful, CEO Klaus Kleinfeld is the real deal and that “Alcoa is back and will be bigger than ever”. John Paulson increased his position by 59% during the second quarter. The miner has a $12.3 billion market cap, trades at 13.5 times earnings and offers a 1% yield.
Bank of America (BAC): Cramer isn’t bullish about financial stocks in the short-term but he has BAC in his charitable trust’s portfolio. John Paulson had more than $1 Billion in this mega-cap bank but he sold half of his stake in BAC during the second quarter. Bruce Berkowitz is the most bullish about BAC at the moment.
SPDR Gold Trust ETF (GLD): With the price of gold up 20.34% YTD, Cramer bolstered his stance on owning gold to insure the portfolio against drops in markets. Cramer stated the SPDR Gold Trust ETF is the safest, most convenient way to play the precious metal. Gold is not done going up, and the only time Cramer would recommend selling gold is when it represents more than 20% of your portfolio. John Paulson has been extremely bullish about physical gold, gold miners, and GLD.
NetApp (NTAP): Operating in data centers-- the best performing area of the technology sector-- Cramer feels NetApp desperately needs to report good news or there may be nowhere left in the technology sector to hide. NetApp failed to deliver the good quarter Cramer felt the company desperately needed in order to salvage some aspect of the technology sector. The data center company not only reported a bad quarter, but CFO Steve Gomo said the numbers were because of the budget ceiling crisis in Washington. Many investors believed the stock was immune to the slowdown because it had secular growth. However, NetApp’s cautious commentary took investors by surprise, since the data storage system business had been seen as a major growth area. NetApp reported a Q1 ‘12 revenue of $1.46B, below analysts’ expectations of $1.51B. Executives said the hardest hit was its financial group of clients that were scaling back.
Transocean (RIG): The world‘s largest offshore driller just bid $1.43B for Norway‘s Aker Drilling, a 98% premium. While this may seem unreasonable, Cramer poses the question: does anyone have more visibility than Transocean? John Paulson is also bullish on this stock. He had more than $1 Billion in RIG at the end of June.
Wells Fargo (WFC): A viewer inquired as to Wells Fargo's long-term growth prospects. While Cramer said WFC would be a survivor, in the end it is a bank stock and it will be a long time before owning the stock will be profitable. This favorite of Buffett’s has a $124 billion market cap, trades at 9 times earnings and yields 2%.
Barrick Gold Corporation (ABX): This largest gold producer on Earth is the miner Cramer recommends buying if you’re looking to own something more than GLD. The company has a $54.5 billion market cap and trades at 14 times earnings.
International Tower Hill Mines (THM) and Nova Gold (NG) are two speculative plays as they operate mines that are still in development. Cramer said owning these miners is like having a call option on gold. John Paulson has the largest position in NG among the 300+ hedge funds we are tracking.
Mosaic (MOS): Jim Cramer analyzed Mosaic’s technicals and has been bullish about the stock since July. John Paulson initiated a brand new position in the stock during the second quarter. Billionaire investor David Tepper also initiated a brand new position in MOS during the second quarter .
Walter Energy (WLT): This stock has been making headlines, but Cramer said its rise is due to potential takeover-- and not the news out of China. The energy company has a $5.5 billion market cap and trades at 12 times earnings.
Cramer admitted that he called this one wrong. He recommended this stock on the belief that it would be taken over. Not realizing that earnings would be this bad, Cramer recommends waiting until the stock falls about 5 points lower and then buying it.