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Cramer on BAC - Caveat Emptor

Bruce Krasting's picture




 
BAC is up 2.5% this AM following a strong tout by Cramer last night. His words:
"Bank
of America (BAC): "Huge upside...they simply didn't tell a good enough
story last week...at $13 is great; next stop is $18...you gotta pounce
now.
"

“You gotta pounce now”. I would put that comment in
the category of a table pounding recommendation. Based on last night's
close Jimmy is calling for a near term rise in the stock of 35%.

In this market you can’t discount anything. BAC could go to $18 by September, but I doubt it.

In
July of 2008 the stock was trading hands at 23, on that basis a market
‘call’ back to 18 doesn't seem out of line. However, a year ago BAC had
5 billion shares outstanding. Their market cap was $115 billion. In
July of 2009 BAC has 6.4 billion shares outstanding, a 28% increase in the float.

At Cramer’s price of $18 BAC would have a
market cap of $115 billion. The same market cap of a year ago when the
stock was $23. A lot of bad things have happened to BAC in the past
twelve months. At one point they looked like they were going under.
That is not going to happen. But the idea that this company has a value
equal to one year ago just does not add up to me.

BAC is not a
one-way ticket to a 35% upside. There is a lot of risk in the stock at
this price. I think the only ones to make money on this call are the
guys who pay Cramer for his TV tips six hours before he makes them.
They are looking ‘smart’ this morning as they sell yesterday’s buys to
Cramer’s toutees.

 

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Thu, 07/30/2009 - 12:15 | 19443 Anonymous
Anonymous's picture

I'll stand up for one thing JC said last week. "We are getting long manufacturers even if their earnings are manufactured"

Thu, 07/30/2009 - 10:50 | 19282 Iceobar
Iceobar's picture

Cramer is a classic spokesman for our newfound "Used Car Salesman" philosophy and is out there pawning junkers for rebates. But unfortunately in this instance I can see several non-fundamental reasons for a price pop. If anyone has been following the p/c's on BAC they'll know that for what seems to have been weeks on end that this ratio has been in the .30 - .40 area and on very heavy volume. Compare BAC's numbers to GS and JPM over the same period. Someone appears very interested in a higher price. Also, I've got BAC's point of equilibrium up at the $19 - $23 area. The complementary bull flag on the daily chart doesn't hurt either, so I'd be cautious about "banking" against this one....IMHO

Thu, 07/30/2009 - 09:46 | 19165 EQ
EQ's picture

So, if I follow your logic, I guess anyone who is a charlatan should be beyond reproach by anyone in the press if that particular journalist knows nothing about being a charlatan?  That makes sense.  At least it does comparative to today's mainstream media.  I bet you are a Fox or CNBC journalist. 

Thu, 07/30/2009 - 09:26 | 19148 John Self
John Self's picture

You know, I'm gonna swim against the tide here and suggest that Cramer is harmless.  Would I put any faith in any of his stock recommendations?  No.  But ask yourself what the purpose of the show is.  It's primarily entertainment, with stocks as a backdrop.  It's low- to middle- brow, but I suspect it needs to be to stay on the air.  Something like Wall Street Week isn't going to make sufficient ratings for CNBC's advertisers.

Cramer warns you to do your own homework before any transaction.  If you're so much of an idiot that you just run out and buy based on what some guy on TV says, then I put you in the same class as the subprime mortgagor who can't afford her payments after the reset.  Shame on you for entering into a transaction you didn't understand.

Jon Stewart's rant against him isn't remotely credible.  WTF does Jon Stewart know about any of this?  Over the past two years, the vast majority of financial commentators got things wrong -- most of them more often than not.  There were a couple of instances where Cramer got things right, and there were far more where he got things wrong.  My loose understanding of what he's saying recently suggests that he's probably very wrong now.  But so be it; that's the nature of the gig.  You're going to be wrong sometimes. 

Thu, 07/30/2009 - 07:47 | 19097 gr8t4ever
gr8t4ever's picture

one of his hedge fund cronie is probably long and he's pumping it up for them to get out.

Thu, 07/30/2009 - 07:00 | 19080 ng2amarinefunk (not verified)
ng2amarinefunk's picture

Jim Cramer:

This guy gives example to every possible instance of stock manipulation, he 'defines' the

dynamic limits of being unethical, yet not quite lawfully worth enforcing...Yet being

Cramer...HE IS JUST THE PERFECT LICENSED STOCK ADVISOR TO MAKE A QUITE COST

EFFECTIVE EXAMPLE OF ... beyond lawfulness...he IS licensed, still? right? or like his

lawyerhood...no longer needing a license...?  Harvard Law School Huh!

 

http://www.dickipedia.org/dick.php?title=Jim_Cramer

http://en.wikipedia.org/wiki/Jim_Cramer

 

lets find out which federal judicial district judges jurisdiction and get this

prioritized as a high value case...winning is NOT important....just the warning

flag is enought...file it and forget it....drag it out forever...is better..

 

 

Thu, 07/30/2009 - 03:39 | 19055 civilmanus1
civilmanus1's picture

This guy is a moron. You could wake up one day and bac could be a pink sheet stock.

Thu, 07/30/2009 - 04:38 | 19065 Anonymous
Anonymous's picture

Moron? No. Criminal? Yes.

Thu, 07/30/2009 - 06:55 | 19078 Cheeky Bastard
Thu, 07/30/2009 - 03:00 | 19053 ZenRazor
ZenRazor's picture

It's widely rumored that John Paulson owns a boatload of BAC around $10 and believes it is headed to $30.  That is probably the extent of Cramer's "research", though it far outweighs his normal idiocy.

Thu, 07/30/2009 - 02:13 | 19045 Bruce Krasting
Bruce Krasting's picture

Steak: At my age it is better than sex...

Thu, 07/30/2009 - 04:23 | 19063 Anonymous
Anonymous's picture

heck yeah!

Thu, 07/30/2009 - 00:03 | 19005 Anonymous
Anonymous's picture

You have to watch this, a really good one from the Daily Show ripping Cramer on his praising of Lenny Dykstra:

http://www.cjr.org/the_audit/the_daily_show_gets_jim_cramer.php

This is hilarious.

Wed, 07/29/2009 - 23:45 | 18992 Steak
Steak's picture

A trifecta of Mr. Krasting on the upper bar.  Its better than chocolate.

Wed, 07/29/2009 - 18:06 | 18681 Anonymous
Wed, 07/29/2009 - 14:09 | 18363 PragmaticIdealist
PragmaticIdealist's picture

Cramer is perennially 'full of it.'

www.deepcapture.com delves into just how insane it can get via a case study of Dendreon Corp.

Do NOT follow this link or you will be banned from the site!