Jim Cramer Is Wrong About Baidu

Jim Cramer’s been sour on Baidu.com, Inc. (ADR) (NASDAQ:BIDU) for more than a year, but that doesn’t mean that you should follow suit.

“These Chinese stocks they’ve had a really big run,” he said during Mad Money‘s lightning round on Tuesday. “I tell you to buy, and then the Communist party does something stupid and I look like I’ve got General Tso’s chicken on my face. Let’s hold off on that one.”

It’s not fair to hold Cramer to the sound bites he’s slinging during his show’s lightning round — even that questionable General Tso’s remark — but his attitude has been largely negative in recent months.

Jim CramerFour weeks ago he suggested that a caller cash out on Baidu.com, Inc. (ADR) (NASDAQ:BIDU), once again arguing that he’s not fond of Chinese stocks.

“I’m not crazy about playing China with single stocks,” he said when asked about China’s leading search engine back in February, recommending an ETF that buys a basket of Chinese equities instead.

The problem, in retrospect, is that Baidu.com, Inc. (ADR) (NASDAQ:BIDU) shares closed at $89.35 that day. It has gained 63% since then through yesterday’s close, and the stock hit a new 52-week high today.

Being bearish on Baidu.com, Inc. (ADR) (NASDAQ:BIDU) may have paid off last year, but it’s been a bad call in 2013. Let’s go over some of the days when Cramer nixed Baidu during Mad Money‘s speedy call-in round.

Call Date Close
Sept. 7, 2012 $109.59
Nov. 28, 2012 $95.81
Feb. 27, 2013 $89.35
March 27, 2013 $88.13
Aug. 22, 2013 $139.54
Sept. 17, 2013 $143.81

Sources: CNBC and Wall St. Cheat Sheet.

It’s easy to see why investors began to get nervous last year. Qihoo 360 introduced a new search engine, and its juicy position as the company behind China’s most popular Web browser and online security software helped it become an overnight success. A year later, Qihoo 360 is up to roughly 15% of the market by some counts. That’s an impressive rookie season. However, most — but not all — of those gains have come at the expense of smaller search engine alternatives.