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Cramer’s Warning to Short-Sellers

Tuesday, 14 Feb 2012 | 6:08 PM ET
Cramer's Memo to Short Sellers
Mad Money host Jim Cramer explains why stocks turned negative on Tuesday, but managed to post small gains at the close.

Hedge fund managers who bet against individual companies they perceive as being overvalued better go on more than just too much price appreciation, “Mad Money” host Jim Cramer said Monday.

Case in point—Monday was a “real bad day for people who bet against these hyper-momentum stocks,” he said.

Michael Kors, for example, was already up 50 percent since December before it reported a “gigantic” number Monday. KORS subsequently jumped 27 percent, and Cramer believes the marginal buying came from hedge fund managers who made a short bet .

Fossil was also overvalued going into the quarter and released disappointing revenues before the bell Monday.

“When Fossilfailed to break down horribly at the opening, as many thought it should, the shorts pressed their bet, layering on a whole new layer of short stock,” Cramer said.

But then the company’s conference call spoke about earnings that were about to accelerate, and the stock surged 14 percent.

“Memo to short-sellers: Bet against companies when something’s wrong, not when their stocks seem to have run up too much,” Cramer said.

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  Price   Change %Change
FOSL
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MIKE KORS HO
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