Tuesday, 05/27/08
Posted 05/27/08,  8:43 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Tuesday, 05/27/08

  Dow Jones: 12,548  +  68
  NASDAQ:   2,481  +  36
  S&P 500:   1,385   +  9
 
 
 
 
 
First Segment
 
 
Final Segment 2 Title: 'The Warsaw Pack'

.  .  .  .  .

Featured Stock(s):

Mechel Open Joint Stock Company (MTL)

See MTL's official website here.

See the Yahoo! Finance profile for MTL here.

See Jim's original complete comments for MTL from Monday, 4/7/08, here


Wimm-Bill-Dann Foods (WBD)

See WBD's official website here.

See the Yahoo! Finance profile for WBD here.

See Jim's original complete comments for WBD from Tuesday, 4/8/08, here


CTC Media, Inc (CTCM)

See CTCM's official website here.

See the Yahoo! Finance profile for CTCM here.

See Jim's original complete comments for CTCM from Wednesday, 4/9/08, here


Central European Distribution Corp. (CEDC)

See CEDC's official website here.

See the Yahoo! Finance profile for CEDC here.

See Jim's original complete comments for CEDC from Thursday, 4/10/08, here


Central European Media Enterprises (CETV)

See CETV's official website here.

See the Yahoo! Finance profile for CETV here.

See Jim's original complete comments for CETV from Friday, 4/11/08, here




See Final Segment 2, below...

 
After this segment, you can see Jim's Sudden:Death picks here...

        
JJC:    What do you do with a domestic economy - excluding my new tech companies - that are, for the most part, exporting to the rest of the world... that's in the dust...

We've got declining housing prices... maybe a bottom, out 12-18 months...

We've got consumer confidence so low, the government should probably start mailing out bottles of Prozac, instead of the $600 rebate checks to get people shopping again... Obviously, gasoline... I paid $4.22 this weekend...

How do you still make money in this environment?...

I recommended - and have been recommending, and have just been saying... put as much as 20% of your funds in foreign companies... I've been saying that consistently since the show started, and I'm not backing down... And, as recently as just a few months ago, we've been saying there's a lot of money coming at us from Russia... or, to be more accurate, the countries of the old Warsaw Pact... of course, with love...

In a market where commodity prices are rising, there are whole areas of the world that are far wealthier in minerals and oil and gas than we are.... I think you want to invest in those places, and Russia, with its enormous oil and gas wealth, is chiefly one of them.

You want some proof that investing in the former Soviet Union, and its ex-satellites, works?... All right, go back... to the week of April 7th... I told you that these reformed communists had become some of the best bourgeois capitalists rotors of them all... second only to the communist Chinese...

.  .  .  .  .

See all of Jim's comments for each of these five stocks, from the week of April 7th, 2008...

MTL complete comments from that night's show here


WBD complete comments from that night's show here


CTCM complete comments from that night's show here


CEDC complete comments from that night's show here


CETV complete comments from that night's show here

.  .  .  .  .

I recommended a basket of five Russian and Eastern European stocks and, collectively, they're up 13.7%, while the S&P 500 did not even return a full percentage point, over the same period (since the week of April 7th, 2008)...

I regard that as "exhibit A" of why you should be in foreign markets for 20% of your assets...

.  .  .  .  .

Now it's time to update our "Warsaw Pact Portfolio"... both because we believe in doing homework... Remember, it's "buy and homework" in Cramerica... not just "buy and hold." That doesn't work if you own that Pfizer (PFE)... okay...

Even though our basket is up 13.7% in less than two months, while the S&P has done virtually nothing, I made a mistake... I made an error when I put this portfolio together... and it needs to be corrected.

I'm embarrassed about... CTC Media, Inc (CTCM), a Russian TV company...

The first four stocks (Mechel (MTL), Wimm-Bill-Dann Foods (WBD), Central European Distribution Corp. (CEDC) and Central European Media Enterprises (CETV)) were really fabulous. I'm actually quite proud of these... MTL, up 19.7%; WBD, up 14.8%; CEDC, up 19.2%; CETV, up 20.1%; and then this stinker... CTCM... This was a comparative disaster, down 5.2%... Worse, on May 6th, it was down as much as 15%! I mean, I was ready to go to Siberia immediately...

.  .  .  .  .

I want to keep owning the other four stocks. The thesis behind each one of them is still in tact but, you know what?... I feel like we're back, not to even, but we're down only 5%. I want to cut and run from CTCM... and that's one of the reasons why I wanted to revise the portfolio.

I don't like to just throw them out there and forget about them. That's bush league...

I never should have put both CETV and CTCM in the same basket... purely, at least, as an issue of diversification...

All of CETV's markets seem to be doing well, and it's the one I want to stick with, but what about CTCM?... How could it fail in this environment? The idea here was that commodity wealth would move through Russia's economy. We were right on that with the other stocks... The mineral wealth seems to have trickled down to food and beverages, even though we know that Putin took as much as he could... And WBD and CEDC did well... And it seems to have trickled down to infrastructure, through the government, thus the strength of MTL, the steel company.

But it doesn't seem to have trickled down to CTCM... no... Partially, I think that's because entertainment is a luxury, not a necessity, as food, beverages and infrastructure are... So it takes longer for money to trickle down from Russia's oil and gas wealth...

Also, if you compare CTCM in Russia to CETV in Eastern Europe, you can see how CTCM is in a worse position. Remember, we're weighing which one to keep...

CETV has audience share in its markets, ranging from 18-40%... That's a great proxy for advertising growth in its markets... CTCM just has 12-13% audience share in Russia, so it's not necessarily going to do well, just because the Russian ad market is growing... it's too small.

Plus I think CTCM didn't work, because it overpaid on a big acquisition, a la Time Warner Inc. (TWX) with AOL... or
Wall of Shamer, Gary Pruitt from McClatchy (MNI), overpaying for anything... Especially in the media world, overpaying is just deadly...
 

.  .  .  .  .

The Bottom Line!:      The Warsaw Pact portfolio marches on... But we've had our show trial and sent the Bukharin of the group (i.e., CTC Media, Inc (CTCM)) - not for execution, but to Siberia - where it belongs! Consider Mechel Open Joint Stock Company (MTL), Wimm-Bill-Dann Foods (WBD), Central European Distribution Corp. (CEDC) and Central European Media Enterprises (CETV) buys.

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


MTL

51.48

52.10

Mechel Open Joint Stock Company (MTL)



WBD

127.55

125.86

Wimm-Bill-Dann Foods (WBD)



CTCM

27.50

27.46

CTC Media, Inc (CTCM)



CEDC

72.92

72.57

Central European Distribution Corp. (CEDC)



CETV

103.70

104.67

Central European Media Enterprises (CETV)


 

 

 



See all of tonight's stocks' latest quotes on Yahoo! Finance



Most popular
investing books ordered:
(click any book to see at Amazon.com)