In Jim Cramer's opinion, one would have to move heaven and Earth to create a more horrible portfolio than that of Third Avenue Focused Credit fund.
Third Avenue is the mutual fund that barred redemptions last week, prompting serious turmoil — and total hysteria for some investors — in the high-yield bond market.
There were two main events in the Third Avenue story that caused the turmoil to occur. First was the unprecedented decision by David Barse, the former CEO of Third Avenue, to stop redemptions of the mutual fund without even consulting the SEC.
This move shocked Cramer, because a mutual fund is not like a hedge fund with special lockup rules. When someone invests in a mutual fund, there is the notion that there is a posted price of what the fund is worth and that they will be able to redeem their shares and get a price when they choose. There are rules behind these things, and they must be followed.
"To me, this unilateral decision to cease redemptions on the spot is tantamount to a repudiation of the laws set up to protect investors in these kinds of vehicles. I don't know how the authorities can overlook this move," the "Mad Money" host said.
The second side of the shocking Third Avenue story was the junk that the fund bought. Cramer went through all of its hideous assets over the weekend and found that the vehicle was reminiscent of the funds put together in the peak of the junk housing credit boom in 2007.
"Put simply, Third Avenue Focused Credit was a collection of the worst pieces of garbage under one roof that I have ever seen," Cramer said.