Transcripts For CNBC Mad Money 20160406 : vimarsana.com

Companies are to go that defined todays action with the dow jumping 113 points, s p climbing 1. 05 , nasdaq falling 1. 59 . First, we all know that stocks have come up a lot from the february lows, but not all stocks. Only a select group of stocks have managed to claw their way back into our hearts. Mainly service companies, international businesses, those Consumer Products corporations and those involved, at least bottom fishing here, went up, resources mining minerals. However, a ton of stocks have been left behind. Especially health care stocks. Theyve been in the doldrums because theyre easy political whipping boys during primary season and theyve had some disappointing earnings. Then all of a sudden someone comes out and says he wants to do deals. He tells us he might have as many as 10 takeover targets and one or two of them will be bought in the next quarter or two. Suddenly were off to the races with animal spirits that jar us into remembering that its not just investors who buy stocks, other companies do, too. Other, and it helps when the ceo in question says it all on Live Television to me in the morning thats right, im talking about the chief executive of allergen, the once inquisitive gone quiet drug company who came on cnbc with me, carl, and david this morning and said now that his deal with pfizer is off, hes ready to do some buying. What will he buy . Heres what sanders told me on squawk on the street. Aller again has always been a growth pharma company. We have always bought growth assets. And so when you look at the profile of the companies you mentioned, some are growth oriented and others are not. Neigh is a growthoriented business with strong fundamental businesses and a good r d pipeline to sustain that growth is of interest to us. In short, Brent Saunders will buy anything that can give allergen growth. With those words, we got a burst of buying and a gigantic portion of the market thats been left behind in recent months pharma and bio tech. And it lit up the joint. You augment that with oil going crazy, the obsession with oil going higher being fundamental to the bulls in the stock market and its a whole different world out there. A ray of sunshine. You see, for a few years we had a couple of companies in the Health Care Space that would kick the tires everywhere they could be kicked, allergen, you saw Brent Saunders and valeant. Because of their foreign domiciles, both of them could buy any American Drug company and make it additive to earnings because they have the lower tax rate overseas. These two became the titans that stalked the earth in the drug business and you either got bought by them or you bought someone else to grow. Out of nowhere, we got a perfect conflagration that brought down the entire edifice. Allergen got a takeover bid from pfizer, taking the biggest, allergen itself, out of the game while sating the growthhungry pfizer. Then valeant blew up, a combination of arrogance, greed and politics, namely the president ial election where the Company Managed to do the impossible. Valiant supplanting the banks as public enemy number one. You lay around all sort of question eyebrow raising practices of everhigher drug prices and weird distribution methods, crummy Balance Sheet and the next thing you know valiant stock plummeted from 266 to 33 in eight months. Valiant will be using its stock to make acquisition but nobody wants the currency. The Business Model appears to be breaken. Vessel yent. Then suddenly out of no, where bolt of lightning comes a newly aggressive Treasury Department that says these drug company inversions where businesses move overseas have top stopped by someone, even if the Legal Authority is somewhat questionable and they fill the pfizer al vallergen deal. And i said last night the new regulations were a nonchalant way of moving the goalpost right when allergen and pfizer were on the field to nail the uprights. I said it should have been called a kill the pfizerallergen merger rule. Why not . I figured no one else was doing it so why bother calling it anyone else . Brent saunders agree with me, by the way. Looks like i was wrong, though. As of today, were changing everything. This is the jack lew drug bolt market because the treasury secretary freed both pfizer which needs to buy someone badly and allergen which basically shouted from the radiotops let the speculation begin and started a whole new round of mna. Ive been saying without takeover this is group is dead, dead, dead. In fact, without takeovers its been in free fire zone for short selling. Every short seller knew you can short anything, biotech, medical device, didnt matter. There were no buyers. Then last night we had a positive technical outlook about how this bio tech group was about to take off. I thought what the heck . This time the queen has lost her mind. Nope, she said bio teches are ready to rumble. Holy cow, what a call. So whos worrying . How about the bio tech she is mentioned. Regeneral ron hated by its topic dermatitis drug is flying. Sanofi maybe pulls the trigger on the rest. Biogen zooming, nothing is too big. Allergen is going to get 40 billion. Even gilead is ramping, why not . Like so many other drug companies, gill i cant tell stock are cheap. The fib and a half chi queen is 4 for 4 and because shes 4 for 4, the whole index, the big etf names, get taking up. Now, none of this will be possible if valeant werent getting killed today like usual. Isnt that what usually happens . This stock has been a oneman bear market casting a pal over the entire group because the Political Program and regulatory scrutiny it brought to the industry. Brent saunders took the idea of buying valeant off the table. Even down here. But he didnt dismiss the idea of snapping up one of its divisions like the one he used to run, bausch lomb. That plus a buckup Conference Call by the cheerleader in chief with the gigantic stake in the company shackle it had bear with some rah rah, worthy more of villanova than valeant. Stocks stampeded higher and then it rallied hard again after the bell when the possibility of a debt deal may be in hand. Vrx up huge. As i said earlier, though, drug stocks alone cant make this market work. We needed oil which had been in freefall lately. Turnaround. How do you turn it around . Simply do the same thing its done since oil was at 26, you find some nameless oil minister from some big middle eastern country and he comes out and says look, pricing discipline is going to come out april 17, opec meeting. Its a confab taking on mythally positive proportions. Worked before, work today. Inventories fell more than expected to. And why dont we just go full bore irony here . The Justice Departments decision to file suit to block the Baker Hughes Halliburton merger released these two dead weights, sent those stocks higher so they can acquire down and outers in their sector in order to start growing again. Eureka. The Justice Department is giving us almost as much new life to the oil stocks as treasury did the drug stocks . Who ever said the Obama Administration is bad for the stock market . Of course, i can hear the naysayers chattering its all about speculation, cramer. Froth, youre condoning froth, youre a snake oil salesman. No, im simply observing two beatendown groups come back to life because the government put a spur under them as surely as if they were matadors waving red flags and snorting tormented bulls. I dont want to be too premature about a froth judgment. Theyve been bottom feeders for ages so feel free to here . At whats working and call this rally into question. Go ahead. But let me give you my bottom line. I say the bulls owe a note of thanks to treasury and justice for getting the animal spirits going again helping to create wealth in the stock market. Even if they only did it by accident. Hey, a wins a win. Keith in illinois, please, keith. Caller jim, happy wednesday. Yeah, me, too. You, too. Caller my question is about ulta beauty. Ive been trading this stock for the last five or six years and its been a juggernaut and ive never made so much money in the stock and then felt so stupid because every time i sell it it goes higher. I keep thinking the law of big numbers is going to come back. Ultas tse secret that they have both high end like estee lauder and lower end and theyre in neighborhoods where people like to come by, try stuff on, then they go buy it on the web, they have great omni channel and samestore sales are fabulous. Dont touch ulta. I know it hit an alltime high today but i think that ceo is terrific. Ulta goes hire. Maybe the treasury and Justice Department did us good by blocking these deals. Wealth creation is back. On mad money tonight, investing is like buying a home, its all about location. Is it time for someone to move into kay bee homes . Even though the merger between pfizer and allergen will neverdneve neverdom pass, there are plenty of deals that rocked the market this year. I dont want to tell you, its so good. Plus a company has the potential of ease the pain of 27 Million People in the u. S. Alone. I suggest you stake with cramer. From time to time i like to put on my yenta hat and play match maker. Make me a match, find me a find, catch me a catch. Foryoure not that into fiddler on the roof think of this as less than Investment Banking where wall street bigwigs propose potential mergers to corporate clients. If i were a rich man, i would be at goldman sachs. Tonight im putting my unsolicited match making talents in the service of kay bee home. The home builder with operations in texas, arizona, parts of the east coast, Mountain West and, most importantly, california where it owns an enormous treasure of prime real estate. After peaking in 2013 at 25, kay bee home stocks spent more than two years going lower although lately its up 15 for 2016, 14 today in part because management has become very aggressive about buying its own stock back. Its that last point that really caught me when i was going through the quarter. In their latest fiscal quarter, which ran from december through february, kay bee homes, huge buyback, shrink the share count by an astounding 8 . The Company Knows this is a good investment because its 14 stock trades at a gigantic discount to its book value, which is real, and its over 19 a share. In short, based on simple accounting, kay bee homes assets are very obviously worth a heck of a lot more than where its stock is currently trading and to me that makes this company a prime candidate for a takeover. You cant get this many building parcels of land together in one roof. Plus, giving kbh a 1. 3 billion markup would be the easiest thing if the world for one of these multibillion dollar larger Home Builders to gobble up right up. Ch kay bee home has Balance Sheets saddled with 2. 6 billion in debt. That leaves a lot to be desired. But they have location, oh and also location, and location. Not just in california. In the latest quarter, 31 of their orders were in colorado texas but another 13 arizona and nevada which is doing okay, another 15 in the southeast, florida, maryland, north carolina, virginia, not bad and most important, yes, indeed, 41 of their orders come from california which has places lake the bay area in San Francisco where the Housing Market is on fire. Call it a bubble if you want to, but we know from past experiences housing bubble cans last a long time before they pop. Especially when there isnt much land left. California very hard to build on. Kay bee homes, it has a ton of that buildable land. And its not just about states. Kay bee homes likes to focus on high growth submarkets in these regions, many of which are doing pretty well right now. However, regardless of the strength in specific regions where they have a lot of exposure, this stock market has had a very hard time getting much respect on wall street, including, by the way, from me. I have been critical of it for some time and ive been right. But not anymore. In the wake of the great recession, kay bee homes plunged as low as 5. Were bottoming in october of 2011, then the Housing Market heated up again and the stock bounced back to 25 in may of 2013 well off the lows but still below the stocks 85 all time high during the bubble of 2005. Still, that 25 peak turned out to be ephemeral and kay bee spent the next two and a half years going lower. Stock falling to 9 and change at the low. That was only two months ago. The most recent declines were about the companys exposure to high risk market, especially in texas where the oil busters hurt cities like houston combined with shrinking margins as land costs rose and the Home Builders became more promotional. There was the lingering worry of rate hikes making mortgage more expensive but Janet Yellens notes released from the fed didnt make me change my views. Thats one reason why kb homes has soared from 9 to 14 today. The stock should never have been down that much in the first place which is how it planned to rally from february 13 to march 4 on new new news. The stock had another leg higher after kb homes reported two weeks ago and they delivered a nice top and bottom line beat with their housing gross margin expanding from 15. 1 to 16 . When kb reported, we learned there was an explanation on what looked like no new news. The company was buying back stock hand over fist. On january 13, the board approved a 10 million share buyback. That will retire nearly 10 of the companys share cap. Normally this repurchase program happens over an extended period of time. Not here. When kb reported, we found they bought 8. 4 million shares during their fiscal First Quarter alone. That means its up over 8 of the share cap in just three months. Thats extraordinary. And they did it at very low prices. This has to be one of the biggest buybacks relative to company size ive seen in quite some time. Autozone, how big was that bye back. And because they shrunk the share count, kb home boosted its book value per share. The accounting value of the company if you were to liquidate everything, its 19. 22. On the call, the ceo said they have 1. 6 million shares left in the buyback and are thinking about increasing authorization. Kb did most of the buying when the stock was trading between 55 of book, now its currently trading to 75 of book which is extremely inexpensive for a company that owns a ton of real estate, particularly in hardtobuild cases. The case for someone stepping in acquiring kb is similar to nestors own rationale for buying so much stock. The darn thing is absurdly undervalued. So who can make sense . We noodle on this and came up with one. I think pulte. The large home builder that struggled to find growth. Now theyre having a leadership squabble. I looked at the letter and i thought thats too nasty. Their long time chairman announced hed be retiring in a little over the year but by the end of the day the companys founder William Pulte released a letter saying a year was too long and he should step down sooner. Heres your hat, whats your herry . He had specific gripes with the leadership including the stocks lack of performance even as the competitors have valued nicely since the great recession. But this is what caught me. In an interview with the pulte family published yesterday in the wall street journal, we learn they think dugas hasnt invested in land. Well, go buy kb home. Pulte has about 37 lots. That does look like they didnt do enough buying when the land was dirt cheap. They could boost that figure by an astounding 35 overnight by acquiring kb and its portfolio, 482, 00 lots. The combination would bring the team to the fold which is answer another criticism of the pull the family. By snapping up kb, pulte would have the scale to challenge large competitors and the two companies eeg graphic footprints are complementary as pulte knows about the east coast, kb knows about california. Thats a soft spot for pulte. Kb home is insanely cheap right now. I think any of the big Home Builders could benefit enormously by acquiring the company while the stock is still depressed but pulte home would benefit the most. Im like a yenta or goldman. I think ill wave my match making Investment Banking feel if the deal happens. Good guy. Much more mad money ahead. The Third Largest Semiconductor Plant in the world was created but is ill still worth buying . Ill break it down. Then a medical device up more than 20 today but down 30 year to date. Ill unveil this stock and see if we can keep the healthy gains coming when i sit down with the ceo. Its a tactic that has worked for a year and i dont see it stopping any time soon. Ill tell you what it is when i unveil my consumer packaged goods playbook for you. I suggest you stick with cramer in the wake of the news that the Treasury Department has broken up the pfizerallergen merger and now going into the Halliburton Baker hughes acquisition its worth remembering theres still very, very big deals from last year that went through and have been lucrative. Hallelujah consider the massive 37 billion merger of avago and broadcom, it created the Third Largest semiconductor on earth. When avago announced it was buying broadcom a new star was born in the semiconductor firmament. And while the stock of the company, the new Broadcom Limited which trades under avgo, has surged up 14 since the beginning of february, you know what . I think theres a lot more here to go. What made this avago such a smart one . The old avago was about making wiring infrastructure and industrial end markets the. Old broadcom fit perfectly here. Their main businesses were in the wired and Consumer Products<\/a> corporations and those involved, at least bottom fishing here, went up, resources mining minerals. However, a ton of stocks have been left behind. Especially health care stocks. Theyve been in the doldrums because theyre easy political whipping boys during primary season and theyve had some disappointing earnings. Then all of a sudden someone comes out and says he wants to do deals. He tells us he might have as many as 10 takeover targets and one or two of them will be bought in the next quarter or two. Suddenly were off to the races with animal spirits that jar us into remembering that its not just investors who buy stocks, other companies do, too. Other, and it helps when the ceo in question says it all on Live Television<\/a> to me in the morning thats right, im talking about the chief executive of allergen, the once inquisitive gone quiet drug company who came on cnbc with me, carl, and david this morning and said now that his deal with pfizer is off, hes ready to do some buying. What will he buy . Heres what sanders told me on squawk on the street. Aller again has always been a growth pharma company. We have always bought growth assets. And so when you look at the profile of the companies you mentioned, some are growth oriented and others are not. Neigh is a growthoriented business with strong fundamental businesses and a good r d pipeline to sustain that growth is of interest to us. In short, Brent Saunders<\/a> will buy anything that can give allergen growth. With those words, we got a burst of buying and a gigantic portion of the market thats been left behind in recent months pharma and bio tech. And it lit up the joint. You augment that with oil going crazy, the obsession with oil going higher being fundamental to the bulls in the stock market and its a whole different world out there. A ray of sunshine. You see, for a few years we had a couple of companies in the Health Care Space<\/a> that would kick the tires everywhere they could be kicked, allergen, you saw Brent Saunders<\/a> and valeant. Because of their foreign domiciles, both of them could buy any American Drug<\/a> company and make it additive to earnings because they have the lower tax rate overseas. These two became the titans that stalked the earth in the drug business and you either got bought by them or you bought someone else to grow. Out of nowhere, we got a perfect conflagration that brought down the entire edifice. Allergen got a takeover bid from pfizer, taking the biggest, allergen itself, out of the game while sating the growthhungry pfizer. Then valeant blew up, a combination of arrogance, greed and politics, namely the president ial election where the Company Managed<\/a> to do the impossible. Valiant supplanting the banks as public enemy number one. You lay around all sort of question eyebrow raising practices of everhigher drug prices and weird distribution methods, crummy Balance Sheet<\/a> and the next thing you know valiant stock plummeted from 266 to 33 in eight months. Valiant will be using its stock to make acquisition but nobody wants the currency. The Business Model<\/a> appears to be breaken. Vessel yent. Then suddenly out of no, where bolt of lightning comes a newly aggressive Treasury Department<\/a> that says these drug company inversions where businesses move overseas have top stopped by someone, even if the Legal Authority<\/a> is somewhat questionable and they fill the pfizer al vallergen deal. And i said last night the new regulations were a nonchalant way of moving the goalpost right when allergen and pfizer were on the field to nail the uprights. I said it should have been called a kill the pfizerallergen merger rule. Why not . I figured no one else was doing it so why bother calling it anyone else . Brent saunders agree with me, by the way. Looks like i was wrong, though. As of today, were changing everything. This is the jack lew drug bolt market because the treasury secretary freed both pfizer which needs to buy someone badly and allergen which basically shouted from the radiotops let the speculation begin and started a whole new round of mna. Ive been saying without takeover this is group is dead, dead, dead. In fact, without takeovers its been in free fire zone for short selling. Every short seller knew you can short anything, biotech, medical device, didnt matter. There were no buyers. Then last night we had a positive technical outlook about how this bio tech group was about to take off. I thought what the heck . This time the queen has lost her mind. Nope, she said bio teches are ready to rumble. Holy cow, what a call. So whos worrying . How about the bio tech she is mentioned. Regeneral ron hated by its topic dermatitis drug is flying. Sanofi maybe pulls the trigger on the rest. Biogen zooming, nothing is too big. Allergen is going to get 40 billion. Even gilead is ramping, why not . Like so many other drug companies, gill i cant tell stock are cheap. The fib and a half chi queen is 4 for 4 and because shes 4 for 4, the whole index, the big etf names, get taking up. Now, none of this will be possible if valeant werent getting killed today like usual. Isnt that what usually happens . This stock has been a oneman bear market casting a pal over the entire group because the Political Program<\/a> and regulatory scrutiny it brought to the industry. Brent saunders took the idea of buying valeant off the table. Even down here. But he didnt dismiss the idea of snapping up one of its divisions like the one he used to run, bausch lomb. That plus a buckup Conference Call<\/a> by the cheerleader in chief with the gigantic stake in the company shackle it had bear with some rah rah, worthy more of villanova than valeant. Stocks stampeded higher and then it rallied hard again after the bell when the possibility of a debt deal may be in hand. Vrx up huge. As i said earlier, though, drug stocks alone cant make this market work. We needed oil which had been in freefall lately. Turnaround. How do you turn it around . Simply do the same thing its done since oil was at 26, you find some nameless oil minister from some big middle eastern country and he comes out and says look, pricing discipline is going to come out april 17, opec meeting. Its a confab taking on mythally positive proportions. Worked before, work today. Inventories fell more than expected to. And why dont we just go full bore irony here . The Justice Department<\/a>s decision to file suit to block the Baker Hughes Halliburton<\/a> merger released these two dead weights, sent those stocks higher so they can acquire down and outers in their sector in order to start growing again. Eureka. The Justice Department<\/a> is giving us almost as much new life to the oil stocks as treasury did the drug stocks . Who ever said the Obama Administration<\/a> is bad for the stock market . Of course, i can hear the naysayers chattering its all about speculation, cramer. Froth, youre condoning froth, youre a snake oil salesman. No, im simply observing two beatendown groups come back to life because the government put a spur under them as surely as if they were matadors waving red flags and snorting tormented bulls. I dont want to be too premature about a froth judgment. Theyve been bottom feeders for ages so feel free to here . At whats working and call this rally into question. Go ahead. But let me give you my bottom line. I say the bulls owe a note of thanks to treasury and justice for getting the animal spirits going again helping to create wealth in the stock market. Even if they only did it by accident. Hey, a wins a win. Keith in illinois, please, keith. Caller jim, happy wednesday. Yeah, me, too. You, too. Caller my question is about ulta beauty. Ive been trading this stock for the last five or six years and its been a juggernaut and ive never made so much money in the stock and then felt so stupid because every time i sell it it goes higher. I keep thinking the law of big numbers is going to come back. Ultas tse secret that they have both high end like estee lauder and lower end and theyre in neighborhoods where people like to come by, try stuff on, then they go buy it on the web, they have great omni channel and samestore sales are fabulous. Dont touch ulta. I know it hit an alltime high today but i think that ceo is terrific. Ulta goes hire. Maybe the treasury and Justice Department<\/a> did us good by blocking these deals. Wealth creation is back. On mad money tonight, investing is like buying a home, its all about location. Is it time for someone to move into kay bee homes . Even though the merger between pfizer and allergen will neverdneve neverdom pass, there are plenty of deals that rocked the market this year. I dont want to tell you, its so good. Plus a company has the potential of ease the pain of 27 Million People<\/a> in the u. S. Alone. I suggest you stake with cramer. From time to time i like to put on my yenta hat and play match maker. Make me a match, find me a find, catch me a catch. Foryoure not that into fiddler on the roof think of this as less than Investment Banking<\/a> where wall street bigwigs propose potential mergers to corporate clients. If i were a rich man, i would be at goldman sachs. Tonight im putting my unsolicited match making talents in the service of kay bee home. The home builder with operations in texas, arizona, parts of the east coast, Mountain West<\/a> and, most importantly, california where it owns an enormous treasure of prime real estate. After peaking in 2013 at 25, kay bee home stocks spent more than two years going lower although lately its up 15 for 2016, 14 today in part because management has become very aggressive about buying its own stock back. Its that last point that really caught me when i was going through the quarter. In their latest fiscal quarter, which ran from december through february, kay bee homes, huge buyback, shrink the share count by an astounding 8 . The Company Knows<\/a> this is a good investment because its 14 stock trades at a gigantic discount to its book value, which is real, and its over 19 a share. In short, based on simple accounting, kay bee homes assets are very obviously worth a heck of a lot more than where its stock is currently trading and to me that makes this company a prime candidate for a takeover. You cant get this many building parcels of land together in one roof. Plus, giving kbh a 1. 3 billion markup would be the easiest thing if the world for one of these multibillion dollar larger Home Builders<\/a> to gobble up right up. Ch kay bee home has Balance Sheet<\/a>s saddled with 2. 6 billion in debt. That leaves a lot to be desired. But they have location, oh and also location, and location. Not just in california. In the latest quarter, 31 of their orders were in colorado texas but another 13 arizona and nevada which is doing okay, another 15 in the southeast, florida, maryland, north carolina, virginia, not bad and most important, yes, indeed, 41 of their orders come from california which has places lake the bay area in San Francisco<\/a> where the Housing Market<\/a> is on fire. Call it a bubble if you want to, but we know from past experiences housing bubble cans last a long time before they pop. Especially when there isnt much land left. California very hard to build on. Kay bee homes, it has a ton of that buildable land. And its not just about states. Kay bee homes likes to focus on high growth submarkets in these regions, many of which are doing pretty well right now. However, regardless of the strength in specific regions where they have a lot of exposure, this stock market has had a very hard time getting much respect on wall street, including, by the way, from me. I have been critical of it for some time and ive been right. But not anymore. In the wake of the great recession, kay bee homes plunged as low as 5. Were bottoming in october of 2011, then the Housing Market<\/a> heated up again and the stock bounced back to 25 in may of 2013 well off the lows but still below the stocks 85 all time high during the bubble of 2005. Still, that 25 peak turned out to be ephemeral and kay bee spent the next two and a half years going lower. Stock falling to 9 and change at the low. That was only two months ago. The most recent declines were about the companys exposure to high risk market, especially in texas where the oil busters hurt cities like houston combined with shrinking margins as land costs rose and the Home Builders<\/a> became more promotional. There was the lingering worry of rate hikes making mortgage more expensive but Janet Yellens<\/a> notes released from the fed didnt make me change my views. Thats one reason why kb homes has soared from 9 to 14 today. The stock should never have been down that much in the first place which is how it planned to rally from february 13 to march 4 on new new news. The stock had another leg higher after kb homes reported two weeks ago and they delivered a nice top and bottom line beat with their housing gross margin expanding from 15. 1 to 16 . When kb reported, we learned there was an explanation on what looked like no new news. The company was buying back stock hand over fist. On january 13, the board approved a 10 million share buyback. That will retire nearly 10 of the companys share cap. Normally this repurchase program happens over an extended period of time. Not here. When kb reported, we found they bought 8. 4 million shares during their fiscal First Quarter<\/a> alone. That means its up over 8 of the share cap in just three months. Thats extraordinary. And they did it at very low prices. This has to be one of the biggest buybacks relative to company size ive seen in quite some time. Autozone, how big was that bye back. And because they shrunk the share count, kb home boosted its book value per share. The accounting value of the company if you were to liquidate everything, its 19. 22. On the call, the ceo said they have 1. 6 million shares left in the buyback and are thinking about increasing authorization. Kb did most of the buying when the stock was trading between 55 of book, now its currently trading to 75 of book which is extremely inexpensive for a company that owns a ton of real estate, particularly in hardtobuild cases. The case for someone stepping in acquiring kb is similar to nestors own rationale for buying so much stock. The darn thing is absurdly undervalued. So who can make sense . We noodle on this and came up with one. I think pulte. The large home builder that struggled to find growth. Now theyre having a leadership squabble. I looked at the letter and i thought thats too nasty. Their long time chairman announced hed be retiring in a little over the year but by the end of the day the companys founder William Pulte<\/a> released a letter saying a year was too long and he should step down sooner. Heres your hat, whats your herry . He had specific gripes with the leadership including the stocks lack of performance even as the competitors have valued nicely since the great recession. But this is what caught me. In an interview with the pulte family published yesterday in the wall street journal, we learn they think dugas hasnt invested in land. Well, go buy kb home. Pulte has about 37 lots. That does look like they didnt do enough buying when the land was dirt cheap. They could boost that figure by an astounding 35 overnight by acquiring kb and its portfolio, 482, 00 lots. The combination would bring the team to the fold which is answer another criticism of the pull the family. By snapping up kb, pulte would have the scale to challenge large competitors and the two companies eeg graphic footprints are complementary as pulte knows about the east coast, kb knows about california. Thats a soft spot for pulte. Kb home is insanely cheap right now. I think any of the big Home Builders<\/a> could benefit enormously by acquiring the company while the stock is still depressed but pulte home would benefit the most. Im like a yenta or goldman. I think ill wave my match making Investment Banking<\/a> feel if the deal happens. Good guy. Much more mad money ahead. The Third Largest<\/a> Semiconductor Plant<\/a> in the world was created but is ill still worth buying . Ill break it down. Then a medical device up more than 20 today but down 30 year to date. Ill unveil this stock and see if we can keep the healthy gains coming when i sit down with the ceo. Its a tactic that has worked for a year and i dont see it stopping any time soon. Ill tell you what it is when i unveil my consumer packaged goods playbook for you. I suggest you stick with cramer in the wake of the news that the Treasury Department<\/a> has broken up the pfizerallergen merger and now going into the Halliburton Baker<\/a> hughes acquisition its worth remembering theres still very, very big deals from last year that went through and have been lucrative. Hallelujah consider the massive 37 billion merger of avago and broadcom, it created the Third Largest<\/a> semiconductor on earth. When avago announced it was buying broadcom a new star was born in the semiconductor firmament. And while the stock of the company, the new Broadcom Limited<\/a> which trades under avgo, has surged up 14 since the beginning of february, you know what . I think theres a lot more here to go. What made this avago such a smart one . The old avago was about making wiring infrastructure and industrial end markets the. Old broadcom fit perfectly here. Their main businesses were in the wired and Wireless Communications<\/a> with chips that delivered voice, video, data, and multimedia connectivity across a host of devices. Theyre integral to broadband, wifi and now the internet of things. The products are so ubiquitous that roughly 99 of all data traffic crosses at least one of broadcoms chips. Thats astounding. They touch everything. So given all the overlap in their end markets its not surprising when the deal was announced avago said they could achieve 750 million of annual cost synergies within 18 months of the closing. Better still, broadcom acquisition would be immediately attive the. Immediately to the Companies Earnings<\/a> and free cash flow. Even better, broadcoms margins have lagged avagos by 18 . One is a better manufacturer than the other. Yet avago said they would get broadcoms margins in line with their own, something that should generate a major surge of profitability. Plus buying broadcom makes avago less hostage to apple. Before the deal, wireless made up 32 of avagos sales with chips going to the iphone. In the urn less exposure to one big customer. Who knows, maybe one day apple sees a slowdown in phone sales or worse maybe they switch suppliers that always kept the lid on avago stock. Sure avago paid 37 billion for broadcom, but we learned the two companies were in talks and while that sounds like a fortune, in retrospect its a good deal. After the deal closed on february 1, avago kept its own management, this legendary guy called ha tan. Hes staying as ceo. But it formed a new i entity called Broadcom Limited<\/a>. Thats a better sounding name than avago. That sounds like a disease or something. So what is this new combined Broadcom Limited<\/a> look like . It controls 4. 5 of the total semiconductor market. Thats thursday place by intel and taiwan semi. Theyre the elite in the big growth end market. Fiber optics, storage connectivity, chips for wireless, set top boxes, broadband and either net switching. Thats not either the whole list. Its everything you need to have quality entertainment at your fingertips. The Broadcom Limited<\/a> is the rock star of the semi space. In the consolidating industry where scales become important, this new broadcom has the scale to rival anybody. The real strength of the deal is are Wireless Communications<\/a> where the old broadcom and avago had a major presence and intel has lagged giving the new broadcom this opportunity. In wireless, avago had a dominant position in high end radiofrequency chips that allowed smart phones to function efficiently across a congested electromagnetic spectrum. How congested . Back in the days when cell ph e phones used 3g networks, they needed five networks, but 4g lte requires 20 bands. Which means these devices need more complex chips that filter the signal from 2g, 3g and 4g not to mention wifi, bluetooth and gps. Avago was king of those chips and it had filters, power amplifiers that wifi and gps and bluetooth wants. Put it together and the combined company has more intellectual property in each phone. Even better, they can package these products together as a one stop shop for smart phone semis. The other area where these two complement each other is wired. Avago and broadcom each had strong space in switches, process processors, that little stuff. Avago brings a ton with data center space. Broadcom gives you the huge broadband business. In short, with in new deal, the new Broadcom Limited<\/a> became the premier chip maker for communications and connectivity and the semiconductor industry, thats where all the moneys being played. So two months since the closing, how is the deal progressing . Well, the Company Reported<\/a> a terrific quarter, nice topandbottom line at the beginning of march. The numbers only included numbers from avago but management gave us information on how the combined company is doing going forward. As of the second quarter, wired infrastructure will make up 55 of the business. The additional broadcom injected into the mix and wireless will be 23 of the combined in the second quarter. Management says this will be a trough for the wireless division. They expect sales to ramp in the end of the year. The rest is the avago Enterprise Storage<\/a> business which is on fire and the industrial segment which is becoming a small part of the company but should generate a sequential sales increase in the high Single Digits<\/a> in the second quarter. How about those synergies . Remember the 750 million in cost synergies . Management reiterated the new broad comm will hit that number within the next six quarters, perhaps sooner. So theyre either on schedule or ahead of schedule. But despite having these things going for it, this is the conundrum. The new Broadcom Limited<\/a> tratds at 12. 3 times earning estimates putting it at roughly the same valuation as intel oral nxpi, nxp semi. Texas instruments sales for 18 times 27 earnings. That means the new broadcom is way too cheap. It deserves to trade at a premium to nxp and Texas Instruments<\/a> thanks to it increased scale. It should train at a people are where up to intel which despite being a well run company, its got way too much exposure to the endlessly declining personal computer business. The new broadcom should have an 18 growth rate. That means it should trade at 18 times earnings at the least and that could see this 157 dollar stock rallying up to 226. Were seeing 43 gain in the not too distant future. Heres the bottom line. Ahaving gos acquisition of broadcom is a fabulous merger. And while the stock is up 14 , i think its got a lot more room to run. Sean in maryland, sean. Caller yeah, jim. Hows it going . Caller okay. Hey, listen, ive got a lot of stock in Sherman Williams<\/a> and they bought value spar for 9 million. Should i leave the stock alone . Oh, yeah, it was a brilliant acquisition. Valspar. The little consolidation the paint industry will allow more money to be made. Certainly hold sherwinwilliams. I need to go to jordan in louisiana. Jordan . Caller thanks for taking my call. Not a problem. Caller since ive been hearing news about the Office Depot Staples<\/a> merger ive been wondering, should i buy into either before the merger or after or in the end, i dont care, they merge, dont merge, its a no growth business. Buy costco. Costcos got the stuff you need at staples and its cheaper. Thats the one to go to, its one my Charitable Trust<\/a>. Gary oh, no, looks like im done. Avagos acquisition of broadcom was a major smart move. I think theres plenty more room to run here. Avgo. Need a Knee Replacement<\/a> . I hope not. Head to the printer. Tonight im revealing a medical device with cuttingedge technology that could be worth that could be eye opening. Then, stocks sharper behavior has changed. Its impacting the way you can invest. Im opening up my play book. And all your call, rapid fire in tonight special edition of the lightning round. Stick with cramer this is lulu, our newest dog. Mom didnt want another dog. She said its too much work. Lulus hair just floats. Uhh help me doorbell mom, check this out. Wow. Swiffer sweeper, and dusters. This is what im talking about. Look at that. Sticks to this better than it sticks to lulu. Thats your hair lulu mom, can we have another dog . laughing trap and lock up to 4x more dirt, dust and hair than the store brand stop cleaning. Start swiffer ing could it finally be worth circling back to conformist, a company that uses 3d printing to do something useful, creating custom design joint replacement implants fitted for individual patients along with customized medical instruments. They came public at 15 bucks a share, spiked as high as 25 in august before it went into freefall and this Stock Plunged<\/a> as low as seven bucks and change in midfebruary. It went back to 10. 61 as of yesterday and today the darn thing broke out up 20 part of a gigantic rally. I think con formisis an intri e intriguing concept. They have several concepts on the market including the only customized total Knee Replacement<\/a> out there. They launched their customized posterior stabilized Knee Replacement<\/a> system and they were solid with 34 revenue growth. However this is tiny and speculative. Not yet profitable. Just this past monday conformis withdrew from fda although they plan to resubmit. You have to be careful not to chase. A big move today. So lets look with dr. Phillip lang the founder and president of ceo of conformis to learn where the company is doing. Good to see you, sir, have a seat. Thank you. You have the only custommade product on the market and the sales were good but you did have a recall some say there could be an impact because of the recall. We had the recall in august of last year and it was related to an outside vendor, didnt impact our implants, was related to the instrumentation and we told the street at the time that we would address it within two month which is we did so we were operationally fully recovered within two months and here we are today as were focusing on the opportunity in 2016, the company is growing and we have a very large opportunity ahead of us with our big u. S. Product, our largest product by available market for years to come. And from your quarterly Conference Call<\/a> it seemed that you said in the market youre picking up a lot of share despite whatever happened to the recall, 15 market share of primary Knee Replacement<\/a>s quickly so do you want to tell us what you think doctors are seeing that make it so youre taking shares so fast . So the key driver is really the clinical outcomes paired with economic outcomes. What were seeing in our patients is that, for example, in published studies, they walk faster than offtheshelf patient, patients having an offtheshelf implant. Patient satisfaction is 20 higher compared to an offtheshelf implant if you get a conformis implant and that translates in interest by the doctors and patients. So exiting 2014 we had more than 10 market share of all primary Knee Replacement<\/a>s in 14 markets in the u. S. , in 2015 we had 22 markets where we had more than 10 share, seven of those a 15 share. That wiese a limited product. We only had a partial knee and a socalled cruciate retaining total near where the posterior cruciate ligament is retained. Thats a smaller opportunity, only 22 . That said, with posterior cruciate substituting implant, thats 60 of opportunity that went into full launch in march, we tripled the available market and were leveraging that into the existing opportunity. Now medicare, comprehensive care for joint replacement, lets go to april 1, 16. You any this is going to help you. You think medicare is going to like the idea that the custom made, even though its more expensive than the offtheshelf, that theyd like it. Why would they like something more expensive than offtheshelf . Aside from the broad commercial launch of our total ps, this was a landslide for us, this is fantastic. So when the program was announced we reviewed it and what happens under the new program is that the hospitals are now being held accountable for everything that happens in the hospital but also everything that happens within the 90 day period after the hospital, including patients having to go to rehab, to rehab centers, Skilled Nursing<\/a> facilities and these discharge facilities. So that said, the hospital, the hospital ceo is now being held responsible for the full economic package within the 90day period. It so happens we have in a very large cohort we have data that shows that conformis patients are doing better economically specifically. Conformis patients is 2. 5 times likely to have an event within the 09day period. A conformis patient is 5. 5 times less likely having to go to a Skilled Nursing<\/a> facility after the surgery. If thats the case, you should have a breakout quarter rather soon. Can you become profitable just because of the idea that obviously these doctors should be switching to you if they want to be able to do well in this new medicare regime. They passed a profitability for med device companies, our stage is a longer path. You have a significant upfront investment. On the one side our focus is on top line growth and we are growing faster than any to the extent that i know any publicly traded Orthopedic Company<\/a> in the market. The other part of this equation is gross margin and theyre basically executing on material cost reduction, youre looking at a company where today most of the implant components are still outsource sod as we vertically integrate that we can improve our cost structure, labor cost reduction, softer automation and last but not least progressive overhead reabsorption as you build volume. Thats nothing magic. Thats the process of typically two or three or four years for most companies and were very similar. This is exciting time for your company, stock has come down a lot but thats part of an Overall Group<\/a> and today its up very big because there was a huge move in the stocks, all the stocks, but theres an interesting thing coming and youve obviously had it come down a lot and that makes it safer to me. Dr. Lang is the founder, president , ceo of conformis, youre going to do well under the new medicare rules. Stay with cramer. Its time for the lightning round. And then the lightning round is over. Are you ready . Time for the lightning round. John in new jersey. John . Caller jim, what are your thoughts on wmt . Walmart . I think its fine. I prefer costco, my Charitable Trust<\/a> owns that. I think it has more upside. Lets go to rob in my home state of new jersey. Rob . Caller professor cramer, i want to send a rom bot ram in the bush booyah to you. I become a day trader rock star under your tutelage. My mom had my whole inter answer the tied up in j mpd j and then she heard somebody talking about rpm and she tried to diversify. I love j j, rpm is good too but this day trading stuff, rpm should be owned for the long term. Scott in texas, scott . Caller whats up, cramer . I have to give you a shoutout to my brother nathan. Should by a buyer . I like toyota okay, im not a big fan of the Auto Companies<\/a> because of the currency problems and latin america. A lot of thing go wrong. Randy in florida. Randy . Caller booyah, jim. Booyah. Caller buy, sell, trade Chesapeake Bay<\/a> energy . Which he is sneak no, no, no, no, no. I dont like that bounce. I don stay away. Neil in florida. Neil. Caller booyah, cramer. What are your thoughts on Johnson Controls<\/a> giving the pending merger . I like the merger. I would be a buyer of Johnson Controls<\/a>. How about helen in new york. Helen . Caller jim, how are you . Im good, how about you you, helen . Caller thank you. I have a question about vr. Im a fairly new investor, jim, and id like to know what you thought about that. Its a very sane part of the Financial Sector<\/a> and i agree with you, i think its good. Alan in florida, alan . Caller jimmy, i want to ask you about the small bio tech, they have profits, their revenues are growing fast, supernus. I hear their epilepsy drug may get approved for migraines soon. Do you know anything about these guys . Sounds like you know better than i do. Let me do some work. The only epilepsy drug i know is at gw pharma and thats for a drastic situation. Lets go to dan in connecticut. Dan . Caller jim, booyah. Booyah. Caller i was questioning atad. We favored it for speculation only because parkinsons is so horrible but its only speculation. That is the conclusion of the lightning round. He has a sharp wit. A winning smile. And no chance of getting an athletic scholarship. And that is why you invest. The best returns arent just measured in dollars. Td ameritrade. The new craftsman pro series riding mowers. Now available with power steering. So you can turn with ease. Available with the tightest turning radius in the industry. And powerful v twin engines with up to 26 horsepower. Because the beer you drink after you mow your lawn tastes better than the beer you drink after someone else mows your lawn. Craftsman. When it matters. The lack of belief in what so many describe to me as prices that are way too elevated to be sustainable actually counterintuitively keeps me intrigued in this stock market. The fact that so many people believe stocks are just up way too much versus fundamentals, i kind of like that, too. For example i keep thinking about all these Research Pieces<\/a> lately, the plethora of reports downgrading the consumer packaged goods stocks because theyve run too much. These downgrades seem like hourly occurrences to me. Each piece saeems to make the same point. Same siren, if you will. This group the the most overstretched it has ever been and you have to take profits now before who knows . Should we be frightened . Why dont we take a look at one of the classic names Research Analysts<\/a> keep telling me is overvalued, the stock of general mill which is has gone from 56 to 64 in one years time. Do i think General Mills<\/a> should be at 64 . You look at a stock like this, if i owned in my Old Hedge Fund<\/a> in which case the answer would therefore be yes, because why not, i was right if it went up without me it should be no. I put it that way because almost all the report us read about General Mills<\/a> and others in its cohort are damning with faint praise about how of course its a good company but no way it can support that valuation. The only issue, these reports were issued when the stock was in the 40s, then in the 50s, then the 60s. Its been seemingly without a champion. I asked for the breakfast of champions but ill take cheerios and thats whats got the hedge funds only the analysts and all the Portfolio Managers<\/a> upset. I think theres disregard for this stock because General Mills<\/a> is a classic example of a company thats slow, only somewhat steady little organic growth, no pizazz and therefore a very overstretched situation. Not bad. My mom always said you talk with your mouth full so let me just finish. Im almost done. Okayer here. The stocks principle claim to fame . Like kellogg, campbells soup, it never comes in. Buyers lurk everywhere, underneath, to the side, sometimes above. Meanwhile Companies Buy<\/a> back stock with alacrity, they raise dividends repeatedly, offer just enough Earnings Growth<\/a> to keep the bears at bay. Analyst warn this cant continue and stocks are dangerous because of advances. For all of its gains, do you regard General Mills<\/a> as a dangerous stock . Is it really about to get crushed . I dont think so. Do you think any company thats cohort is about to be obliterated, clorox, kimberly clock, procter gamble,s stay lauder . Do you . You need a very ugly day to penetrate that floor. We were down a percent yesterday. I detected not an ounce of selling pressure. Its tougher to find stock for sales in these companies that it is to get tickets to hamilton. Now, maybe thats because there are no longer brokers willing to position these stocks for sales so they come out the in dribs and drabs or maybe its because people are december it from for their nowmeager dividends or is it just there are no big block sellers because they are largely owned by index funds and when the stock comes for sale the company buys it. Who knows . If you dont already own them, what do you do . I think at this point you have to wait. But youre waiting for a very specific set of events. You need bad news to break in the macro portion of the economy. It has to break between 9 30 and 10 00 a. M. Or between 3 30 or 4 00 p. M. When the companies are forbidden to buy back their own stock. If you get all these circumstances, you might just get a buying opportunity but you cant take the first one. What will happen is that there are now enough momentum guides in these stocks that they will flee on day one and day two. You have to wait for day three 9 30 to 10 003 30 to 4 00 to buy. Who knows . Maybe well discover the move was about consolidation or a weaker dollar. For now, though, theres your consumer packaged goods playbook. Its worked for a year. I dont see it not working any time soon. Stick with cramer. They may want the latest products and services, but they demand the best shopping experiences. Theyre your customers. And by blending physical with digital, cognizant is helping 8 of the 10 largest u. S. Retailers meet their demands with more responsive retail models. Ones that transcend channels and locations, anticipate expectations. Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. Im spending too muchs for time hiringnter. And not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 my m. About my toothpasteice. She eveand mouthwash. Ice. But shes a dentist so. I kind of have to listen. She said jen, go pro with crest prohealth advanced. Advance to healthier gums. And stronger teeth from day one. Using crest toothpaste and mouthwash makes my. Whole mouth feel awesome. And my teeth are stronger too. Crestpro health advanced. Is superior to colgate total. In these 5 areas dentists check. This check up . So good. Go pro with crest prohealth advanced. Moms right. Again special thanks to treasury secretary jack lew who i think may have busted the bear in the drug company cohort. Wow. What a move. All because allergen and pfizer are free to play and free to buy. I like to say theres always a bull market somewhere, i promise ill find it just for you. Im jim cramer. See you tomorrow tilman tonight on billion dollar buyer. Thats a great strawberry jam. That would sell. Im looking to place the big orders in the big apple, but only if these suppliers can prove theyve got what it takes. A pair of foodies from brooklyn find themselves in a jam. Its make or break time. Absolutely. You dont want to have another year not growing your business. A long island leather craftsman just might be too dedicated to his art. Its like these things came out of me. Its like i birthed them. Okay, youre gonna have to say goodbye to your babies. One order from me could take them further than they ever imagined. I like it. Its an incredible collection. Missing out could mean the end of the road. Yall are losing me. Truly losing me. My name is tilman fertitta, and i turned a single texas seafood house into a 3 billion empire","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia600300.us.archive.org\/5\/items\/CNBC_20160406_220000_Mad_Money\/CNBC_20160406_220000_Mad_Money.thumbs\/CNBC_20160406_220000_Mad_Money_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240624T12:35:10+00:00"}