Passing Cramer’s Test
Students in the Marshall school of Business Student Investment Fund manage approximately $2.6 million spread over four portfolios. They have no advisors, the pitch investments to each other and then vote on which stocks to buy for the fund. At the end of the year, they take the credit – or the fall – for their strategies. They are true practitioners of the game, but now they’re pitching stocks to Cramer, the toughest judge on Wall Street.
Brent was up first. He wanted to buy CIT Group , saying the consumer and commercial finance company has a safe dividend and doesn’t have a liquidity issue. “They still have $7.5 billion available on the line,” Brent said in his pitch. “The downside is negligible” and the core business is doing well despite obvious problems in the mortgage sector.
Cramer was impressed. CIT fell apart when people realized 10% of its business was in mortgages, Cramer said, but if the Fed cuts, and he thinks it will, “you’ve got a $45 stock in a heartbeat.”
Alex was pumped up about solar. His pitch was Suntech , a solar company based in China. But that didn’t worry him. The Chinese government is “opening the floodgates,” Alex said, and Suntech has the lowest manufacturing cost basis and the best technologies in the solar industry. Not only that, but it is plenty profitable and trades at a 24 P/E versus an industry average of 74.
It’s risky, Cramer said, especially because it’s based in China. He blessed the idea though, saying it “makes sense” with oil prices so high.
Mark rounded out the group, talking a big game about Human Genome Sciences. The biotech company has two late stage drugs for Hepatitis C and lupus, Mark said, and it’s off over 45% from its highs. What better time to get in?
This stock has been a loser ever single quarter, Cramer said. He doesn’t dislike the company, but thinks a better way to go is with Nastech , which has promising drugs for obesity and autism.
Alex owns Suntech.
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