After this segment, you
can see Jim's Lightning
Round picks
here...
Jim's Comments BEFORE
the interview:
This morning,
Foster Wheeler (FWLT*),
a longtime Cramer-fave
infrastructure play, and a
stock I own for
my charitable trust... has given
us nearly a double since I
recommended it on April
16th of 2007... It
reported a great
quarter... Earnings
per share came in at 85
cents... 12 cents
above the Street's
consensus estimate... what
the Street was looking
for... Revenues
(sales) came in at $1.8
billion, compared to $1.48
billion the Street was
expecting... The
stock soared! It was
up huge before the market
opened...
Then came the conference
call...
And you know what happened
on the conference call...
candidly... I thought the
company shot itself in the
foot! They spent far
too much time talking
about the one bad thing
from the quarter... weak
trends in its North
American power business...
something that's really
only a small part of the
company... Frankly,
I will tell you... I was
confused myself...
which worries me, because
I know the company pretty
well...
This one item - solid
fuels in America, boilers
to be specific - was
almost all that was talked
about in this very long
conference call...
All the positives...
orders, cash generation,
cash on the balance sheet,
new projects, petroleum,
engineering and
construction... a bigger
part of the business...
were totally obscured...
Frankly, I thought it was
management that did the
obscuring, albeit helped
by a Lehman Brothers'
analyst, who relentlessly
drilled down the
softness...
The stock that was up as
much as 3 points before
the call, promptly gave up
all of its gains and then
some... and closed down...
down badly. The
reversal was stunning...
We've got to clear this
up... I know it
concerned me. After
the call, and the
relentless drilling, I
said, well, I've got to
sell a thousand shares
myself, for my charitable
trust... bringing
my position down to
2500 shares... I was
thinking, oh now... have
we lost something here?
Is something in the North
American power business a
red flag, after a great
run? I was spooked,
literally, by
management...
They were much less
bullish than I was going
in. Remember what
happened with
Diana Shipping (DSX).
When I was bullish, and
they told me not to be
bullish, I got out...
I took something off the
table... I told you to.
Now, we don't want to be
greedy, but also there's a
big problem here...
We don't want to miss out
on one of the greatest
long-term trends ever...
infrastructure.
I'm confused. What
do you do when you get
confused... You speak to
the CEO. You talk to
Ray Milchovich, the CEO
for FWLT*... The
man's been money for us.
We'll try to find out if
the future's still bright,
or if there are some
worries on the horizon
that makes us want to
sidestep, or take some
more profits, until FWLT*
maybe goes lower and gives
us a better entry point...
Mr. Milchovich, welcome
back to Mad Money...
. . . .
.
Jim's Comments AFTER
the interview:
He's the chairman and CEO
of FWLT... He has never
steered us wrong. I feel
better. I must admit, the
analysts were acting as if
this thing was just going
to fall apart... It isn't.
Did I freak out? Nothing
wrong with taking a little
profit... Bulls make
money, bears make money,
hogs get slaughtered...
but I'm felling pretty
darn good after that about
FWLT...
. . . .
.
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JJC:
Yeah... It's Whiff Week
here on Mad Money.
Everyday, I'm featuring
one big call that I
completely and utterly
blew... one stock where I
stepped up to the plate,
and then totally
whiffed!...
We're doing this...
focusing on my big
mistakes... because,
without accountability, I
might as well stop doing
the show...
Tonight, the whiff I want
to tell you about is...
Schering-Plough (SGP*)...
How I missed the top of
SGP*...
. . . .
.
About a year ago, May
14th, to be specific...
after SGP*'s CEO had given
us close to a double since
taking over, I had
recommended the stock all
the way up... There
is was at $31.95...
The greatness of CEO, Fred
Hassen... the ability to
transform the company...
I reiterated my buy...
At $31, I had to come out
here and reiterate my buy,
and that was pretty much
the top for SGP*...
Since then, as you
probably know, this stock
has been hammered, and
hammered mercilessly...
It has been just
annihilated bad...
There was a study showing
that Vytorin and Zetia,
cholesterol drugs that
SGP* markets jointly with
Merck (MRK)...
the company's top two
drugs... were no more
effective than previous
generations of drugs...
I stood by SGP* and its
CEO, Fred Hassen, as the
stock fell to $13 and
change... It finally
went back to $18.18, where
it is now...
$31 to $13... I'm
going to wear this post-it
all the way home...
All right, how did I blow
it so bad? How did I
blow it?...
. . . .
.
My biggest mistake was in
thinking that the market
would be rigorous (e.g.,
really look hard at the
numbers and understand
their business)... not me,
but that the market would
be rigorous, when it came
to discounting how much
damage these two drugs
would do, and the study
would do, to SGP*'s
earnings...
You see, when we first
heard that the study was
bad, SGP* fell to the low
$20s... I thought
that was it... I
thought the negative news
was "in" the stock, as we
say on the Street...
To me, it seemed like
simple math...
SGP* had lost almost half
of its value, but the drug
numbers hadn't been cut in
half. Prescriptions
were down something like
15%. One drug, down
15%?.. the company gets
cut in half?... The
market had to be
overreacting, right?...
But then it kept
overreacting... it would
go even lower and lower...
. . . .
.
My second big mistake was
to disregard The New York
Times... which just kept
hitting it and hitting it
and hitting it...
over and over again...
I know that the New York
Times could do some
serious damage, but I
didn't let this sway me...
On March 31st, these
purportedly new results...
they were same old
results, just repeated and
repeated and repeated...
It was stuff we had known
about for months in
advance... The stock was
at $19.47... I was reading
it on Saturday... and,
sure enough, I say, not
good... The stock
went to $14 the next
day...
It just seemed like a lot
of sound and fury to
signify nothing...
Of course, sound and fury
can move the market, so it
crushed the stock anyway,
and it crushed Cramer...
. . . .
.
I also put too much stock
in Fred Hassen, SGP*'s
terrific CEO, and his
ability to create a new
SGP*, by acquiring
Organon, and giving his
company a great portfolio
of upcoming drugs, that
diversified away from
SGP*'s dependence on its
cholesterol franchise.
This was good...
I didn't expect no one
else to see what I saw...
All they cared about was
the pounding from
Vytorin... I thought
that, when Fred Hassen
bought $2 million of his
company's stock at $18 and
change, that that was the
bottom... Wrong
again! He was, in
essence, was being too
rational, and I followed
his lead...
. . . .
.
But the real mistake...
let's call it...
let's talk about the real
mistake, all right...
The real mistake, and the
last one I'm going to talk
about, was simple greed...
greed.
I recommended the stock at
$16 and, then again, I
recommended it at $31...
because of Fred Hassen...
What should I have been
telling people?...
Sell, sell, sell...
Yeah, take a profit, for
heaven's sake... Not
me. I got greedy
and, lo and behold, the
gains vanished...
Well, now, the fear of the
drugs is finally in the
past... The drastic
decline in prescriptions
has not occurred.
And, in the meantime, SGP*
actually has many new
drugs in the pipeline.
I think the story's
actually playing out the
way it should have...
With Fred Hassen's latest
turnaround plan... talking
about $1 billion in cuts
by 2012... in addition to
$500 million in savings
from the Organon
acquisition... and,
given the fact that SGP*
could be one of the only
companies in the drug
business that actually has
enough new products in its
pipeline to offset patent
expirations... I
think this stock is a buy,
buy, buy...
You know, it's almost back
to where I recommended it
first. But
this time, it's a much
better, much more
diversified story...
because of Organon...
. . . .
.
The Bottom Line!:
I whiffed on
Schering-Plough (SGP*)...
I whiffed... I
remained too positive,
because I assumed the
market would treat old
news like... well... old
news... when, in
fact, it took the stock
down over and over and
over again on the same
information. It's
irrational, but the
market's irrational all
the time. We can't
lose sight of that going
forward... And, most
important, I was a pig...
. . . .
.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
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price
next
day
Full Company
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(see comments above for
each)
Go to the LIGHTNING ROUND from
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Jim mentioned it is a stock
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at the very least, not sell
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think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
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Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'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.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
here >>
Helpful Websites:
See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
