Yikes! Hedge Funds Caught With Their Pants Down

Jim Cramer
Jim Cramer

“The big mutual fund and hedge fund managers have been caught with their pants down playing total defense,” Jim Cramer said Wednesday, noting that big cash positions in defensive plays such as Clorox and Kimberly-Clarke suddenly went away.

The rotation out of defensive names, the "Mad Money" host said, came as Bureau of Labor Statistics reported Friday that the U.S. economy created more jobs than expected with 163,000 new positions added in July. Hopes that the European Central Bank will aid Spain and Italy — both its banks and bond markets alike — also seemed accelerate the rotation out of defensive stocks, Cramer added.

Considering these few bullish signs of late, Cramer noted hedge fund managers are now buying shares of retailers, industrials, technology companies en masse.

When this story was published, Cramer's charitable trust owned Clorox.

—By CNBC.com's Drew Sandholm

—CNBC.com and Reuters contributed to this report

@MadMoneyOnCNBC on Twitter

"Mad Money" on Facebook

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