Sell Block: 3 Illegitimate IPOs

The recent increase in dry-bulk and oil-tanker shipping rates has led to a number of public offerings in the sector, Cramer said Thursday. Too bad the interests of shareholders and management at these companies are totally in opposition.

Private ship owners and their banks right now are under some serious financial stress, so they’re forming new companies and selling them into the open market in order to raise cash. They’re hoping to capitalize on the industry’s turn up, Cramer said, but what they are really doing is “taking advantage of investors.”

  • Cramer's Top 10 Emerging-Market Stocks

Here are the three stocks that investors should avoid:

  • Baltic Trading
  • Crude Carrier
  • Alma Maritime

The first two came public last week, while Alma’s IPO is expected to price next week. How bad are the companies in question? Here’s a hint: Two of these so-called shippers – don’t even own any ships.

Cramer recommended that investors stick with the industry’s best of breed: Diana Shipping and Nordic American Tanker . NAT recently told shareholders that its dividend is about to go up “substantially,” Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer

    Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book