Mad Money

Cramer’s New Dirty Dozen


Today, Cramer is offering up a small circle of stocks, the darlings of Wall Street, that mutual and hedge funds just can’t seem to get enough of. These are stocks that enjoy such strong demand their prices seem to climb day after day after day. They’re the go-to names that investors want once buying has resumed after a bad event, say, a Fed meeting or today’s dip in the market.

Dirty Dozen Pt. 1

Even 10 years ago, these names wouldn’t be riding as high as they are nowadays, but the market has changed in some drastic ways since then, Cramer says. Take the positions held by large funds, for instance. Big money managers are measuring their successes in billions, not millions anymore. They have to buy up huge amounts of stock just to register a meaningful profit. And once they have theirs, the smaller funds follow suit.

Dirty Dozen Pt. 2

Despite this giant demand, the floats of these companies are actually shrinking. Companies aren’t issuing new shares to accommodate the demand, Cramer says, they’re retracting them. So basic supply and demand dictates that prices should shoot up as funds with tens of billions of dollars under management fight for sizable positions. “There just isn’t enough of these stocks’ stocks,” says Cramer.

So which stocks enjoy such favor? Let’s start with Whirlpool. According to Cramer, Whirlpool has retired so many shares, even after buying Maytag, that it almost acts like a small-cap stock – only 78 million shares trade. Turns out WHR also is seeing its Brazil business start to bloom, and the resultant firings from the Maytag acquisition will help streamline the company.

Bottom Line: A dozen stocks keep going higher because of the mechanics of the market. Cramer will offer up 11 more names before the show is over. These are the stocks you should consider buying after a down day like today, because Cramer thinks the institutional buyers will be circling back tomorrow.

Questions? Comments?