Mad Mail: Is Capital One the Subprime Lender of Car Loans?
Sensei Cramer: Boo-Yah! I watch your show nearly every night. I own a substantial position in Medco and am very interested every time you have David Snow on the show. I believe MHS is a phenomenal buy right now, but I would have loved to hear more about the recent news of Medco teaming up with Sweden to deregulate its pharmacy market. Do you have any insight as to how this information might affect their stock price? –Dave
Cramer says: “It doesn’t trade on that. What it trades on is competition from UNH and from Wellpoint and for Miedicare reimbursement for Polymedica and for patent expirations. Those are all that matter.” Cramer blamed Medco’s 3.6% drop Wednesday to concerns about the company’s 2010 projections. “I like the stock very much, but let’s be careful.”
Dear Jim: I cannot help but think that credit-card debt is the next dish on the credit-crunch menu of destruction. Capital One writes auto loans and issues credit cards to those with no established credit. Basically, they are the subprime lender of car and credit-card loans. In addition, CEO Richard Fairbank has been selling his shares, eerily reminiscent of what CEO Angelo Mozilo did with CFC. What is your opinion on COF? --Jesse in New York
Cramer says: “I think COF’s made some bad moves…but here’s what you need to know: They are a great lender of auto loans and even better of credit cards…so you’d have to have a very serious recession before you took that company down. It is not a cheap stock. But it is certainly going to be a survivor.” Still, Cramer won’t recommend any financial stocks other than Hudson City, JPMorgan Chase and Goldman Sachs.
Dear Jim: I don't understand why you're such a big Ivan Seidenberg fan. Have you looked at Verizon‘s chart lately? I bought it back in Oct. 2000. Finally decided to dump it recently at an approximately 30% loss. Where is the shareholder value here? Without 55% of the wireless business, VZ would probably be trading at $5...maybe less. Ivan should be added to your Wall of Shame! I'm a big fan Jim, but your praise of Ivan is most definitely unwarranted. -- Frank from New Jersey
Cramer says: “He has made this company into a much better company. It took some time. Wireline – the regular old line – was wiping out every company. The fact is he’s put a lot of money in FiOs, which I think is going to work, and Verizon Wireless. In the end, the dividend is good…and any time that dividend gets to 5%, I’m going to recommend it. Yes, it was a dog for a long time. No, it is no longer a dog. I think it goes to $40-$42.”
Jim's charitable trust owns Verizon.
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