'Mad Mail'

Sears (SHLD)

Q:      I have watched almost every Mad Money episode over the last 4 years and would like to thank you and your staff for all that you do. I heard your reasoning for Sears Holdings Corp’s recent price action on Street Signs the other day, but can you justify its valuation? Earnings have been trending lower for years now, there seems to be little potential for growth, and they have increasingly negative free cash flows. I can’t get my head around it. Am I missing something, or are all the SHLD longs crazy?
Asif

Jim:    There is a tremendous short position in it, including a lot of naked shorting that this new SEC is going to get rid of… second, remember, despite all of these revenues this is only a $6b company… so the market cap is very small… I still believe in Eddie Lambert, I think that he will pull it off… but because of the housing crisis I chose not to ride it down for people… but I will say this, if you think that housing is going to come back and come back strong like I do… then owning Sears stock wouldn’t be such a bad idea… and the balance sheet is not as bad as you think… and their credit line is solid.

'Mad Mail'

General Question...

Q:    Jim,
While the market has been impressive as of late, that leaves a big question for those of us who were burned in the dramatic decline and who haven’t participated in this most recent rally. I know you say that we shouldn’t chase and we should wait for pullbacks, but at what point do we jump in - especially considering pullbacks are now rarely occurring? Where do we latecomers start?
Lee

Jim:    Traditionally in a bull market you wait until a 3% to 5% pullback to start… and a 5% to 8% pullback to be all in… I am using bull market rules because we are in a bull market.

'Mad Mail'

Terex Corp. (TEX)

Q:      Jim,
I feel a lot dumber after experiencing this, so maybe you can help me. Will Terex continue to wallow? Or is there a chance for some gains?

Jim:    No, I do not like Terex, I don’t like the balance sheet… I don’t like Manitowoc (MTW)… I care about balance sheets here, which is also why I said I don’t trust Hartford (HIG), I don’t trust Lincoln National (LNC)… when the balance sheet is in question and we are not out of a recession yet… these companies can still go lower… so no thank you Terex… it is just too dicey… Why not own Caterpillar (CAT)?… If you want dice, CAT can always cut its dividend… I would buy more… I own it for ActionAlertsPlus.com, my charitable trust.

Manitowoc Co. Inc. (MTW)

See Jim's TEX comments above for:
MTW

'Mad Mail'

Hartford Financial Services Group Inc. (HIG)

See Jim's TEX comments above for:
HIG

'Mad Mail'

Lincoln National Corp. (LNC)

See Jim's TEX comments above for:
LNC

'Mad Mail'

Caterpillar Inc. (CAT)

See Jim's TEX comments above for:
CAT