'Mad Mail'

Permian Basin Royalty Trust (PBT)

Q:      Cramer,
You recommended PBT yesterday.  Looking at their SEC report, the engineer they cite says that they have 7.2 million barrels of proven oil reserves in the ground at the beginning of 2008. They produced 1.9 million barrels in 2007. At that rate they will run out in 3.8 years. Why are they a good buy?
Mike

Jim:    Mike, they find oil… and they keep replenishing oil… and that is why that it is so good… and I think that you will see new numbers that you will see that they have a lot oil… that is one of the reasons… now, can I just tell everybody the stock was up a buck… people went out of their minds up today because we recommended it… it was a good idea… but all of the other oil stocks were down, I told people to pay around $8... you have got to listen to me.

Price target to buy PBT:   Around $8.00

'Mad Mail'

SPDR Gold ETF (GLD)

Q:      Would you please explain to me how GLD trades. Does it merely track the price of gold or does it actually buy and sell the metal? If the latter, where do they store the gold they purchase? How do we know whether or not they are fully funded with the metal? Is it possible that the tail could wag the dog? In other words, could the price of gold be manipulated by aggressive buying and selling of GLD?
Tom

Jim:    I love this email Tom… because yes… yes it is… I mean 60% of the demand for gold is jewelry and the rest of it has been this GLD… which keeps buying the gold so it has become very self-fulfilling and worrisome to me… okay, which is one of the reasons that I why I said let gold pull back before we buy any more… because the GLD is driving all of the purchases… Tom is a smart guy… he has what I call, "horse sense."

'Mad Mail'

BP plc (BP*)

Q:      I know that you love BP for its dividend, but I was wondering about its debt. It looks like it has $8 of (debt-cash) per share, but they only earn $6 per share (and that is almost certainly going to come down, right?); of its $6 of earnings, half of that gets paid out in the dividends. Isn’t BP going to be forced to slash its dividend at some point to pay its debt?
Bob

Jim:    First of all I own this for ActionAlertsPlus.com, my charitable trust… Stephanie Link who runs research with me, we are constantly monitoring this, they were committed to the dividend… but we know other companies were committed to the dividend and they recently cut them… I am very concerned but I believe that oil is going higher… and the last time that they spoke oil was in the $30’s, now it is in the $40’s… I think that BP is safe… but we know that we are in an era where the word safe should rarely be used… so we are going to monitor, monitor, monitor.

'Mad Mail'

General question about Warren Buffett...

Q:      Jim,
I have to disagree that Warren Buffett [see Buffett's latest portfolio holdings just updated here...] is selling America. True, he decreased his J&J shares from 61,000,000+ shares down to 28,611,591 shares. He kept over 28.5 million shares! How many companies have more? Those shares today are down from where they were during the 4th quarter and currently yield about 3.6%. What is he doing with this cash? He is loaning it to companies that need cash and are unable to get it from America’s banks.
Mike

Jim:    Alright, Mike… I was really… and yes, I own it for my charitable trust and he sold it much higher… I am saying that he wrote an op-ad in The New York Times that he was buying America… and I think of America as the Johnson Frayer, I think of J&J… and yet that it was he was selling… and I found that (to be) inconsistent… if he is buying special American preferreds that you can’t get… I don’t think that that is buying American.