Mad Money

Mad Mail: Will Obama Hurt Health Care Stocks?

Jim:I've been watching your show and have heard your warnings about investing in stocks that are in Obama's crosshairs, such as pharma and health. Your reasoning is that Obama wants to make health care cheap, and so this will negatively impact growth and revenue for these companies. However, I have to disagree with this argument. Obama's plan to make health care cheaper is not by forcing a reduction in the cost of drugs. Obama's plan is to use taxpayer money to make health care more available to those who cannot afford it. Therefore, the drug companies should not be affected. What do you think? --Vandad

Cramer says:“Actually, President Obama wants to do that, too. That’s why I don’t like UnitedHealth …why I don’t like Cigna . But you have to understand, he’s approaching it very rationally and not in a pro-shareholder way, but maybe in a pro-health-care way. There are many me-too drugs. There are many companies that have drugs that are just kind of fighting back and forth that could be pitted against each other. And Obama wants to pit them to get lower prices for all Americans. It’s not a bad goal. It’s bad if you own the drug stocks.”


Jim:I bought The Chubb Corp. a while back and have heard you recommend this stock as a good stock. Why does it continue to go down? What is the catalyst driving it down, or lack of catalyst to drive it up? --Chuck

Cramer says:“I was hoping they’d be able be, along with Travelers , buyers of the Hartford property and casualty division. But it looks like Hartford got the TARP money, and they don’t have to sell it. Chubb and Travelers are the two insurance companies that don’t need the government’s help. That’s why I like them. I think in the end that works to their favor.”


Dear Cramer:If a company acquires another company for strategic long-term value, does that make the acquiring company less likely to be the target of a takeover, more likely, or totally irrelevant? --Tom

Cramer says:“I was debating this with NetApp just today, saying, ‘Why didn’t NetApp go down when it made that acquisition[of Data Domain]?’ I think it’s because people think that they’re going to be acquired. It can be many different things, Tom. But I’m just giving you that NetApp as being one that shows me that people do not give up after a company’s bought another company.”


Hello Jim:With the autos likely to cease or slash production in the summer months, what impact do you see this having on electricity demand and natural gas prices? Natural gas supply is at high levels and industrial demand is shrinking. Jim, when do you see the price bottoming? --Dan

Cramer says:“I said last week that I though natural gas bottomed at $3.40. It has not taken that price out. And I don’t think the auto companies are going to have an impact on the electricity like we thought they would. Or it’s already been felt.”

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