Cramer Remix: Why companies are scared of IPOs ·CNBC
Abigail Stevenson
Updated
We're already a few weeks into February, and there hasn't been a single initial public offering in 2016.
Jim Cramer was so disturbed by this fact that he decided to take a closer look at the performance of the companies that went public in 2015 to figure out why others were deterred from going public this year.
"That's right, not one IPO in January. Just a big fat goose egg, making it the first month without a deal since September of 2011," the "Mad Money" host said.
The IPO class of 2015 was left in a complete debacle. Of the 211 stocks that went public last year, only 45 are up from their offering price. Four are unchanged, and the remaining 162 are down from their IPO prices.
In other words, 76.8 percent of stocks that went public in 2015 have lost money, even if investors got in on the initial deal.
So, when Cramer examined the 10 largest IPOs from 2015, nine of them are down since coming public and eight of them are down double digits.
"If you're wondering why companies are reluctant to come public in this environment, just remember the hideous performance of the IPO class of 2015," Cramer said.
On a day when the market was all over the place, Cramer would rather take the tried-and-true approach of judging a company not by what it is, but by what it can be.
One of those companies was Disney (NYSE: DIS), which reported better than expected earnings on Tuesday. However, rather than a rallying, the stock got totally crushed on Wednesday.
How the heck was that possible?
It was clear to Cramer that much of Disney's growth came from ESPN. Even though Disney CEO Bob Iger said that 95 percent of Americans with a multi-channel bundle watched sports — with 81 percent of those viewers watching ESPN —the fact is that ESPN does not have as many people watching it on cable as it once did.
Why should an investor risk buying Disney? Because of its long-term prospects. Cramer's hedge fund days of trading day-to-day are over. Therefore, investors do not need to worry how the next quarter could be disappointing if they are thinking about the next few years.
Conventional wisdom is telling Cramer that the cellphone business has peaked, hence the weakness in Apple and its component suppliers.
But Cramer decided to take a more strategic approach, and spoke with the CEO of Skyworks Solutions, David Aldrich. Skyworks is the maker of high-performance radio frequency and analog chips for smartphones, tablets, cars, GPS, broadband and wireless networking.
Skyworks is frequently viewed as a play on cellphone components, particularly for Apple, and the stock has been torn to shreds lately down more than 24 percent year-to-date.
Yet the company delivered a strong quarter recently, which prompted Cramer to ask if the stock has been punished enough.
"The beauty of this is we didn't wake up one day and say we want to be an [Internet of things] player or we want to be in smart automobiles … we're basically solving the problems that we have had to solve with our cellular and our smartphone customers for these new companies who are entering markets that have never been connected," Aldrich said.
Cramer thinks the stock market is playing a dangerous game.
Every day the market plays rock, paper, scissors. It goes on endlessly until the close, and then starts right back up at the end of the day.
The scissors are the Federal Reserve, and the rock is oil. Oil can smash anything that the Fed throws at it. That means Janet Yellen tell Congress as much as she wants about the need to raise interest rates, but oil is the powerful force that can crush her impact on the market.
But here is the problem with playing such a dangerous game — it's zero-sum. It changes by the hour, and every single element of the game is in play at all times. How exhausting!
"That is why, in reality, it is an infantile game that proves only one thing: if you play long enough, you are going to lose," Cramer said. (Tweet This)
Cramer knows that many people are worried about the slowdown in travel and leisure spending in the U.S., but he couldn't help but to notice the fantastic quarter from Wyndham Worldwide on Tuesday.
Wyndham is both the world's largest hotel company, as well as the No. 1 purveyor of timeshares and vacation rentals.
The fantastic quarter prompted Cramer to think the stock is just too cheap to ignore. To learn more, he spoke with Wyndham's chairman and CEO Steve Holmes.
"We produce a lot of cash flow, and we have said consistently that if we don't have acquisitions to pursue we will devote that money to paying a larger dividend … as well as buying back the stock," Holmes said.
In the Lightning Round, Cramer gave his take on a few caller- favorite stocks:
Spirit Airlines: "I like Spirit, I just feel bad. I liked Baldanza [former CEO] he had moxie. But I do believe that stock is cheap and I like Delta and I also like Southwest. The charts are awful."
Rite Aid: "You know what? Buy it either way! They either get the bid finished or they go higher. Either way, I like the situation."
Read More Lightning Round: It's going higher, either way
