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Friday, 09/28/07 - Stat
Capture Bar:
DOW:
13,896
-17
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Nasdaq:
2,701
-8
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S&P 500:
1,527
-4 |
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PRO/CON |
STOCK |
CLOSING
PRICE
THAT
DAY |
OPENING
PRICE
NEXT
DAY |
JIM
CRAMER'S COMMENTS |
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MMC |
25.50 |
na |
'Top Dogs'
Marsh & McLennan Companies Inc. (MMC)
. . . .
.
It is time!... It is time to pay a visit
to my Mad Money Wall of Shame... for
CEOs who are so bad that their very
presence could bring down a company's
stock... If they just vanished - leaving
no one at the helm - I think their
stocks could go higher!
. . . .
.
Today, we're doing two things...
First, I want to move Patricia Russo, of
Alcatel Lucent (ALU)
shame, to the top of the wall... It
looks like Russo's been given a month to
present an emergency restructuring plan
to their board.
ALU said that this was more of a request
for information than an ultimatum... but
I know an ultimatum when I see it. Russo
could go, making ALU perhaps a stock
worth buying...
. . . .
.
Then I want to look at Marsh & McLennan
Companies Inc. (MMC), whose CEO, Mike
Cherkasky is a proud and longstanding
member of the Wall of Shame. I'm putting
Cherkasky right here in the second
spot... He's just right here under
Russo.
Cherkasky was brought in to appease
Eliot Spitzer, after he'd taken MMC to
task... His job was to clean up the
company, and he did it... But then, he
didn't leave...
Both Cherkasky and Chuck Prince (CEO) at
Citigroup (C*)
were brought in by Spitzer, and I peg
these moves together costing investors
$55 billion in total... That's an
amazing reversal of fortunes...
Now, MMC's management is in complete and
utter disarray. Three executives have
left the MMC insurance brokerage
business over the last month. That's
pretty bad... How about Brian Storms?...
His was the most recent departure...
Holy cow!... He had brought in many of
the top-level people, so it's very
possible even more of them could
leave...
Oh, things are pretty bad there at MMC.
It's looking like the turnaround that
MMC keeps promising will take even
longer than expected, and that's exactly
why this company's CEO belongs near the
top of the Wall of Shame...
But!... We forget that MMC is really
three companies, okay?...
Marsh is the insurance brokerage. Kroll
does risk management... And Mercer is a
human resources consulting business...
Do you know that these are actually all
completely good companies?...
While Marsh has been doing terribly,
Kroll and Mercer have actually been
doing well, and Marsh is worth a lot...
. . . .
.
So, now I see two ways to win with
MMC...
We could either have Mike Cherkasky
leave the company, which would instantly
send the stock from here (bear sound) to
here (bull sound)... or they could break
up MMC...
The fact that Kroll and Mercer live
under the same MMC roof is bringing them
down... I think, if you broke this
company up, it'd be worth 14% more than
it is right now.
For example, I think that Willis
(WSH)
- which is a great company - would love
to buy the Marsh insurance brokerage
business alone. That could fetch $20
bucks. That's only 4 points and change
below the current quote... for the whole
company.
. . . .
.
Surprisingly on Mad Money, we actually
did something rigorous on this show...
Basically, we took the three main
businesses - Marsh, Kroll and Mercer -
and we compared them to their peers on
valuation - to see what they'd be worth
independently...
I used the average multiples that
competitors are getting, based on sales
and earnings, before interest and
taxes... I used that as the multiple for
each piece of a broken up MMC, to figure
out what each part would be worth...
Then I added them back together...
And you break up MMC, as sum of the
parts?... $29 bucks. 14% higher than it
is right now.
Now I know that MMC has been one of the
great stocks to avoid - and I sure hope
you did so, as we've been saying you
should... But now we think Cherkasky
could be deposed shortly, or this
breakup could happen...
. . . .
.
Now there are two ways that Mike
Cherkasky can take MMC shares higher...
He can decide to spend more time with
his family and resign or - if he decides
to save face - honestly, he can just
announce the breakup of the company...
. . . .
.
The bottom line!:
Michael Cherkasky's in the Hall of Shame
but, if we start getting signals that
he'll break up the company - instead of
having this on his face (tomatoes
thrown), Marsh & McLennan Companies
Inc. (MMC)
might be a speculative buy.
. . . .
.
See next segment below...
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(In the meantime, we are continuing the recaps!...)
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SEE ALL OF TODAY'S
STOCKS:
Automatically lists
all stocks from Yahoo!
Finance
summaries: |
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See
all of tonight's stocks' Yahoo summaries here
 |
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READ EXCERPTS FROM
CRAMER'S BOOK: |
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Read Jim's new Mad
Money book excerpts here
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PRO/CON |
STOCK |
CLOSING
PRICE
THAT
DAY |
OPENING
PRICE
NEXT
DAY |
JIM
CRAMER'S COMMENTS |
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BMRN |
24.90 |
na |
'Prescription Plan'
. . . .
.
It's Speculation Friday - the one day of
the week where I allow myself to
recommend the riskiest stocks... the
ones that have the most risk but, of
course, can have the most reward...
Today I want to tell you about...
BioMarin Pharmaceuticals Inc. (BMRN)...
It's a hot little sizzling biotech
name that just hit a new high today, off
of Citigroup (C*)
initiating coverage with a buy
recommendation...
Shockingly, I believe the analyst at
Citigroup is dead right...
I regard BMRN as the replacement for the
now defrocked biotech stock, Savient
Pharmaceuticals (SVNT),
which we downgraded last night - sell,
sell, sell! - after a Jim-dandy gain.
BMRN - another one of these speculative
biotech plays - has a bunch of drugs
that are well-protected against
competition. How much do we lover
that?... And some drugs that
address diseases that don't have much in
the way of medication yet, and should
bring in a fairly steady stream of
royalty revenues...
We grade biotechs around here based on
their partners... We could do a lot
worse than BMRN's partners which, by the
way, are Merck (MRK)
and Genzyme (GENZ)...
I've made people mad money over the
years, recommending GENZ, because it has
built a pastiche - yes, a virtual mosaic
- of drugs with orphan status, that
allow for no competition, and very high
prices...
That's how GENZ made it big, and BMRN
should be 'Son of Genzyme'...
All it will take... one big drug.
And the drug I think it will be will be
Kuvan, and it should be approved by the
end of the year.
You want to buy this stock relatively
soon, but give it at least a week to
come in, so you can get a better
price...
Remember, we do speculation on Friday,
because we want to have a cooling off
period, so people don't do what they did
to Hologic (HOLX)
last night, which was to take it up
$2 smackers!...
Kuvan could be huge.
It treats a metabolic disorder called
Phenylketonuria (PKU). That
prevents the body from producing a lot
of essential amino acids in a lot of
protein-containing foods...
There are 50,000 people with it in the
developed world - half of them in the
U.S. - and, right now, the disease has
no treatment, other than eating a pretty
restrictive diet...
The only way to manage PKU is by eating
a very low-protein diet, that
discourages you from eating fish, milk,
eggs... ice cream and cheese...
Most people would have trouble sticking
to a diet like that but, when your life
is on the line, it gets a lot easier...
Still, it would be nice to have some
kind of medicine that does what Kuvan
does...
The drug is expected - are you ready for
this, Skee Daddy? - to cost $25,000 a
year... Remember, with orphan drugs, you
can get away with this...
And while that sounds expensive - only
targeted cancer drugs sell for more - I
think the price is right, considering
that Kuvan will be the only drug that
will be allowed on the market...
Orphan Drug Status...
Because Kuvan will be the only drug
treating PKU, it gets special 'orphan
drug status' that protects it from
generic competition until 2015 in the
U.S., and 2018 in Europe.
BMRN is working with Merck (MRK)
on the drug. MRK picks up some of
the development costs, and gets
marketing rights outside of the U.S. and
Japan... A company called Asubio (?)
Pharma will market Kuvan in Japan...
Now, I am pretty darn sure Kuvan will
get FDA approval by the end of the
year... But, I'm not 100% sure, which is
why this still a speculative stock...
And, if Kuvan doesn't get approved,
BMRN's stock will bet hurt badly...
It has other drugs on the market, and
they're not bad. But nothing as
big or as win or lose as this one...
. . . . .
The bottom line!:
BioMarin Pharmaceuticals Inc.
(BMRN)
is the definition of a
speculative trade, and we liked
it before in the low teens...
Well, we still like it, and I
think you should buy it for
Kuvan, which should get
approvals and should be huge,
although it still has a
considerable amount of risk.
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[
end of opening segment ]
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>> Go to next segment (Lightning
Round Stock Picks...)
Back to top
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Jim
Cramer's Mad Money recap summary from the CNBC TV show. |
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KEY TO SYMBOLS: |
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Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to 'buy'...
'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition: 'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
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