Opening Segment 1 Title: 'Power Forward?' CEO Interview: Ray Milchovich, CEO .  .  .  .  . Featured Stock(s): Foster Wheeler (FWLT*) See FWLT*'s official website here. See the Yahoo! Finance profile for FWLT* here. See Opening Segment 2, below...

        
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...

Think of rule #1 in the hedge fund handbook, Jim Cramer's Real Money: Sane Investing In An Insane World...  Bulls make money, bears make money and pigs get slaughtered...

So, what do we do now with SGP*?...

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...