In this article, we will take a detailed look at Jim Cramer is Bearish on These 10 Stocks in April. For a quick overview of such stocks, read our article Jim Cramer is Bearish on These 5 Stocks in April.
Jim Cramer in his latest program on CNBC urged investors not to take the Federal Reserve’s policy statements and comments “seriously.” Cramer said it has now become a routine that whenever the Federal Reserve officials “blather”, people try to make sense of their every word to get clues about rate cuts and treat their comments as “gospel.”
“I can’t take it anymore,” Cramer said.
Cramer said that most of the time these comments signify “nothing” and they aren’t that “consequential.”
Cramer Wants Everyone to Stop Speculating About Rate Cuts
Cramer was blunt about this matter and said that because many Fed officials can’t keep their “trap shut,” people keep trying to take hints from their comments about the possible number of rate cuts. Cramer said this leads to guessing games even though these comments don’t give us insights at all. He said many Fed members talk about two or three rate cuts and then wait and see how things “play out.”
Cramer, however, said that Fed chair Jerome Powell’s comments matter. He said that as long as we have rate cuts “in front of us,” the number and timing of these rate cuts do not matter.
“What matters is that the Fed wants to be our friend, that’s the takeaway,” Cramer added.
Cramer Says You Should Buy Stocks Before Rate Cuts Begin
Cramer said that nobody knows when rate cuts would begin. Investors, he said, should instead focus on finding buying opportunities in the market since he thinks the period before the beginning of rate cuts is “nirvana” for stocks. The CNBC host said the idea that stocks cannot go higher without rate cuts is just “patently false.”
According to Jim Cramer, what matters here is whether there is any need to cut rates at all. He said the latest jobs report was strong which means the economy is “humming” and the consumer remains strong. He thinks the Fed does not need to do anything at the moment and we are entering the earnings season with a strong consumer.
While Cramer is urging investors to buy companies like Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA) and Eli Lilly And Co (NYSE:LLY) in the current environment for long term, there are some stocks he’s bearish on. In this article we’ll cover some of those.
For this article we watched latest programs of Jim Cramer aired on CNBC recently and picked 10 stocks he’s bearish on. With each stock we have also mentioned the number of hedge fund investors, using Insider Monkey’s database of hedge funds. Why do we pay attention to what hedge funds are doing? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. AGNC Investment Corp (NASDAQ:AGNC)
Number of Hedge Fund Investors: 14
Cramer does not want investors to buy or hold mortgage residential REIT AGNC Investment Corp (NASDAQ:AGNC). In a recent program, Cramer said that this stock “just goes down” and “I don’t want you to touch that stock.”
In its latest earnings call the company talked about important business updates and guidance:
“The fourth quarter marked a decided shift in Fed policy expectations and fixed income market sentiment. The shift in sentiment was led by favorable inflation data and was ultimately reinforced at the December Fed meeting with a reset of market expectations for a series of rate cuts in 2024. The path to the Fed’s December pivot was anything but a straight line. October was a continuation of extraordinary interest rate volatility, persistent higher for longer rhetoric from the Fed, and weak performance across most all fixed income asset classes as the 10-year treasury note yield broke through 5%. Market sentiment, however, improved materially in November following downside inflation data surprises and generally more balanced messaging from the Fed regarding the outlook for monetary policy and inflation.
In response to this improving outlook and with equity markets near all-time highs, fixed income investor sentiment turned in favor of adding duration, which in turn caused interest rates to rally and spread products to outperform. Agency MBS across the coupon stack outperformed treasury and swap-based hedges with lower and middle coupons performing somewhat better than higher coupons. Hedge composition was also a significant driver of performance during the quarter as swap spreads tightened 10 basis points across the curve, 2s through 10s. As a result, an MBS position with treasury-based hedges performed meaningfully better than a swap-based hedge position. Our portfolio increased slightly from $59.3 billion to $60.2 billion as of December 31.”
Read the full earnings call transcript here.
9. Rocket Companies Inc (NYSE:RKT)
Number of Hedge Fund Investors: 19
“You do not want to be in that stock,” Cramer said about Rocket Companies Inc (NYSE:RKT) when asked about the company by a caller who was wondering whether he should hold on to Rocket Companies Inc (NYSE:RKT) and wait for a rebound.
Rocket Companies Inc (NYSE:RKT), which provides mortgage lending, title and settlement services, is down 9% so far this year.
Cramer is bearish on RKT but recommends buying Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA) and Eli Lilly And Co (NYSE:LLY).
In February, during an earnings call, the company’s management talked about how AI could shape Rocket Companies’ business:
“With AI, we are rewriting the rules of the game and structurally and fundamentally changing how this industry operates. Our mortgage origination has long been associated with inefficient up and down hiring cycles. Because of that, scale profitability has been notoriously difficult to achieve in the mortgage industry because that volatility and cyclicality have made it challenging to adequately plan ahead and invest for the future. The industry has traditionally staffed up rapidly to handle higher volume in upmarkets, only to reduce staff and respond to down markets. So those who don’t manage capacity or liquidity effectively may be acquired or exit the industry altogether. And in 2023 alone, we saw this. We saw the industry with 62 M&A transactions, exits and bankruptcies, and recent data shows that capacity is down nearly 35% from the peak.
We believe AI will shape the future of the home buying industry and Rocket leading the way. Technology is the answer to better client experiences and capacity management in our industry. We aim to redefine the home buying experience through AI and deliver market share growth, scaled revenue growth and profitability. I will share with you that automation and AI are being aggressively deployed across Rocket, helping us to deliver better client experiences at scale across the entire home-buying process. Now I’m going to share three examples of how AI is driving impact today across mortgage banking, underwriting and servicing. Purchasing a home can be an overwhelming process, which is why at Rocket, we excel in blending personalized service with cutting-edge technology.”
Read the full earnings call guidance here.
8. Fastly Inc (NYSE:FSLY)
Number of Hedge Fund Investors: 23
Cloud services company Fastly Inc (NYSE:FSLY) is one of the stocks Jim Cramer is bearish on. When asked about Fastly Inc (NYSE:FSLY) recently on his program on CNBC, Cramer said that Fastly Inc (NYSE:FSLY) is not one of this favorites and he cannot back the stock.
“I’m not going to endorse that stock.”
Cramer might not be backing this stock, but 23 hedge funds in Insider Monkey’s database did have stakes in Fastly Inc (NYSE:FSLY) as of the end of 2023. The biggest stakeholder of Fastly Inc (NYSE:FSLY) is John Overdeck and David Siegel’s Two Sigma Advisors which owns a $23 million stake in Fastly Inc (NYSE:FSLY).
7. Foot Locker Inc (NYSE:FL)
Number of Hedge Fund Investors: 24
While talking about the Dogs of the Dow on his recent program, Cramer said that his charitable trust owns Foot Locker Inc (NYSE:FL) but “that’s been a mistake.” In February, Cramer said that Foot Locker Inc (NYSE:FL) is down and not every stock in his portfolio is a winner.
It’s important to note that back in March 2023, Cramer was highly bullish on Foot Locker Inc (NYSE:FL). He tweeted:
“UBS says sell Footlocker, if you do this please remember to invite me to your funeral.”
While Cramer is bearish on Foot Locker, he’s urging investors to buy and hold Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA) and Eli Lilly And Co (NYSE:LLY).
6. Under Armor Inc Class C (NYSE:UA)
Number of Hedge Fund Investors: 31
Jim Cramer was recently asked about Under Armor Inc Class C (NYSE:UA) on his program on CNBC. While Cramer praised Under Armor Inc Class C’s (NYSE:UA) founder Kevin Plank, he said that Under Armor Inc Class C (NYSE:UA) is in a “cutthroat business” with many companies, including Nike, struggling.
“It’s a doggy dog world that Kevin finds himself in and it’s a tough situation for anybody.”
As of the end of the fourth quarter of 2023, 31 hedge funds tracked by Insider Monkey had stakes in Under Armor Inc Class C (NYSE:UA).
Under Armor Inc Class C (NYSE:UA) shares are down about 24% over the past one year. Kevin Plank is returning as Under Armor Inc Class C (NYSE:UA) CEO, replacing Stephanie Linnartz.
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Disclosure. None. Jim Cramer is Bearish on These 10 Stocks in April is originally published on Insider Monkey.