Jim Cramer usually says the purpose of his Mad Money show is not only to make his viewers money, but also to educate them. Apparently some of the viewers though, have no interest in learning. At the start of Mad Money Friday, Jim Cramer came on and enthusiastically said NMT Medical could go from its current price of $17.26 to $100 in a short period of time. We quickly went over to our Bloomberg and pulled up a quote for NMTI, and the stock was already trading up to $22 a share for a gain of 34%.
But Cramer's recommendation of NMT Medical moved another stock even more. At the same time, we pulled up a quote of NMT (Nuveen Massachusetts Premium Income Municipal Fund), a closed-end fund that trades an average of 3,500 shares a day. We watched in astonishment as traders mistakenly began bidding NMT up in response to Cramer's $100 recommendation of NMT Medical.
Within 30 seconds, the closed-end municipal income fund ran from $15.50 to $22 on tens of thousands of shares for a gain of 46%! A Closed End Muni Bond Fund! It stayed up for at least 3 or 4 minutes until everyone became aware that NMT was not the stock Cramer was talking about. Talk about doing your homework before buying a stock.
Due to the late hour, we were unable to obtain a locate to short the stock, but others were able to, and they sent the stock back down quickly. Currently, NMTI is trading around $23 and NMT is all the way back down to $15.50 on over 100,000 shares of volume. Unbelievable!