Jim Cramer Doesn’t Like These 5 Stocks

In this article, we discuss the 5 stocks that Jim Cramer doesn’t like. If you want to read about some more stocks that Jim Cramer does not like, go directly to Jim Cramer Doesn’t Like These 10 Stocks. 

5. Lithium Americas Corp. (NYSE:LAC)

Number of Hedge Fund Holders: 19  

Lithium Americas Corp. (NYSE:LAC) operates as a resource firm. On April 25, during the Lightning Round segment of his show, Cramer gave the company a Sell rating. In his program, Cramer advised a person asking a question to “sell that stock, because it won’t stay like that”. 

On March 18, investment advisory Canaccord maintained a Speculative Buy rating on Lithium Americas Corp. (NYSE:LAC) stock and lowered the price target to C$50 from C$54. Analyst Katie Lachapelle issued the ratings update. 

Among the hedge funds being tracked by Insider Monkey, Singapore-based investment firm Himension Capital is a leading shareholder in Lithium Americas Corp. (NYSE:LAC) with 2.3 million shares worth more than $68 million. 

In its Q1 2021 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Lithium Americas Corp. (NYSE:LAC) was one of them. Here is what the fund said:

“Lithium Americas: The volatility noted above in Lithium Americas Corp. (NYSE:LAC) has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.

High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on Lithium Americas Corp. (NYSE:LAC) that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value or 71bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on Lithium Americas Corp. (NYSE:LAC) will result in us owning the shares with committed capital of -$0.28 per share.

Although we believe in the..” (Click here to see full text)