Jim Cramer saw a dose of the good, old-fashioned rumor mill and takeover talks stir up stocks on Thursday. This is a dangerous game that investors are playing, and he had a few choice words of warning for investors to play it straight.
"Be sympathetic to the idea that takeovers, and even rumors, are working and getting stocks going. But also understand that this is a dangerous game. Invest in best of breed," said the "Mad Money" host.
Sometimes, the market just takes all correlations and throws them out the window. For instance, the dollar got stronger on Thursday, and one would expect that would put pressure on the averages.
Instead, people somehow started thinking that a stronger dollar means weaker oil, which translated into every oil company being vulnerable to a takeout.
"I can't blame anyone for reacting to mergers, or at least possible mergers. That's because investors continue to pile into any company that has merged already or seems to be on the verge of merging," Cramer added.
Cramer also thinks this is the time to take a good look at Twitter. He sees nothing but money just flying out of that one, and thinks there are way too many rumors out there that someone is going to buy Twitter.
In his perspective, Cramer thinks Twitter is making some big moves right now, and likes the improvements on the site that he is seeing.
"You own Twitter because, like Facebook, there could be an earnings breakout here, which will make people realize that the franchise is actually still one more user-generated cash machine. Not yet, but it will be," Cramer said.
Cramer noticed something very strange happening with energy stocks. The price of oil dropped 6 percent, and yet, SunEdison, one of the world's largest solar developers, hit a 52-week high on Thursday.
The reason Cramer is so perplexed is that he knows that solar power competes with energy. So, if the price of oil gets hammered, solar then becomes less attractive and economical.
Yet, the price of oil has dropped to $50 from the $80s since October, and SunEdison has rallied 74 percent during the same period. That's the exact opposite of what one would expect.
What the heck is going on?
Cramer pointed out that the real key to SunEdison's success is the business structure. Last May, SunEdison spun off a portion of its legacy semiconductor wafer business. That allowed SunEdison's main solar business to be valued without the semiconductor portion holding it back.
"The strength in this stock is a testament to the idea that corporate breakups can make you a fortune," the "Mad Money" host said.
One trend that has swept the pharma industry is the concept of specialty pharma. This drug enterprise is one that is a combination of both proprietary and generic drugs.
Cramer has seen that these types of companies are all in a race to merge with one another with the main goal of being as big as possible. He also noticed that most of them are domiciled overseas so they can take advantage of lower tax benefits outside of the U.S.
"That's the hottest category in the market right now, and portfolio managers are scrambling to own one or even two specialty pharma plays in order to outperform the averages," Cramer said.
One example was Mylan Lab's bid for Perrigo on Wednesday, which could create an abundance of synergies for shareholders. Perrigo makes knockoff, over-the-counter medications and prescription drugs, while Mylan has an older generic drug franchise. A match made in heaven!
"It's possible that Teva, another specialty pharma player, could be interested in buying one or both of these two companies," Cramer added.
When Cramer sees a high-quality stock that has a pullback and has tons of potential for the future, he thinks this is a perfect opportunity to do some buying.
Such was the case with Ventas, the healthcare real estate investment trust that owns spans a broad range of properties across the U.S., U.K. and Canada. It spans everything from senior housing, skilled nursing facilities, hospitals and medical office buildings.
The company recently made some big announcements, which Cramer thinks could unlock further shareholder value. First, it announced it would spin off a big portion of its skilled nursing properties into an independent company.
Then it announced it would be acquiring Ardent Medical Services for $1.75 billion, with a plan to sell Ardent's hospital business. Could these big deals take the stock even higher? To find out, Cramer spoke with Ventas CEO Debra Cafaro.
"The spinoff is going to create two companies that are positioned to grow… We have made Ventas better, it still has all the scale you love and even better diversification with the hospital segment and low cost to capital. Great customers, lots of the private pay and still positioned to grow," Cafaro said.
Cramer has reiterated the fact that the CEO running a company can determine the direction of the stock. However, sometimes the top exec can turn a company into deadwood and run it into the ground, too. When that happens, the "Mad Money" host has no choice but to commit the CEO to the dreaded "Mad Money" wall of shame.
Art Coppola is the CEO of the mall real estate investment trust Macerich. Cramer was flabbergasted when Coppola did a huge disservice to shareholders by turning down a beautiful takeover bid from the largest REIT in the country, Simon Property Group.
As a result, Macerich's stock has been slammed by angry shareholders. Cramer considers this horrible decision by Coppola to be a textbook example of how not to run a company.
Cramer rarely sees such a blatant situation where a CEO clearly just made the wrong decision. What a foolish move!
Everyone makes mistakes sometimes, but Coppola really took the cake on this one. In Cramer's perspective, he deliberately decided not to make shareholders money by killing a fabulous takeover bid. For that act of value destruction, he has now officially been added to the "Mad Money" wall of shame.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Starbucks: "I happen to like Starbucks; I think Howard Schultz is doing a fabulous job and so is his team. I think that this stock is a great long-term play, which is why it is one of the biggest positions in my charitable trust."
Philip Morris International:"I don't want the international, I want the domestic. I want Altria; it's starting to yield really nicely. But I don't like tobacco stocks in general though, because I think that frankly they are bad for you."