In this article, we will take a detailed look at Jim Cramer is Bearish on These 12 Stocks.
After recommending investors to go easy on mega-cap tech stocks and take some profits on them during the start of 2024, Jim Cramer is back to praising the strengths and resilience of these companies after major technology stocks part of the Magnificent Seven group started posting earnings. Cramer recently said in a program on CNBC that we have reached a strange “confluence of events” that makes it hard to “value anything.” Cramer praised strong earnings reports from Apple, Microsoft, Meta and Amazon. Cramer advised investors not to worry about high valuations of these companies and said it does not make sense to sell these stocks just because these companies are “big.” Cramer said these major technology companies have not “fooled” their way to such high valuations and there was nowhere else to go for these stocks “but up.”
Cramer’s Thoughts on Apple Inc (NASDAQ:AAPL)
Jim Cramer’s message to market skeptics who believe tech stocks are headed for a crash is this: “enough already!”
Cramer said Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META) generated about $330 billion in collective revenue and about $58.5 billion in collective profits in the recently reported quarter. Cramer said it would not make sense to compare these companies with those that collapsed during the dot com bubble
On a side note, Cramer shrugged off China fears and recommended investors to “own” Apple Inc shares and not trade it.
Cramer Says Tesla Does Not Deserve to Be in the Magnificent Seven Group
Cramer yet again criticized the market’s fears around concentration of the broader stock market gains in a handful of companies also known as the Magnificent Seven group of stocks. Cramer said it does not make sense to worry about market gains of major companies and compare them to smaller companies. Cramer, however, was clear about Tesla as he believes the company no longer deserves to be in the Magnificent Seven group. Cramer said Tesla’s exit from the Mag. Seven group of stocks was made easier by the judge who recently rejected Elon Musk’s $56 billion pay package.
Despite this bullish outlook on tech stocks, there are some companies Jim Cramer is bearish on. In this article we decided to talk about those stocks.
For this article we saw several latest programs of Jim Cramer and picked 12 stocks he’s bearish on. For each stock we talked about the reason Jim Cramer gave for his bearish stance. We ranked these stocks based on ascending order of the number of hedge fund investors. Why? 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).
12. Invesco Mortgage Capital Inc (NYSE:IVR)
Number of Hedge Fund Investors: 7
Jim Cramer, when asked about Invesco Mortgage Capital Inc (NYSE:IVR) in a recent program, said he does not know “what mortgages they have” and therefore cannot recommend the stock.
“And I suggest you do not own it.”
Over the past one year Invesco Mortgage Capital Inc shares have declined by 41%.
As of the end of the third quarter of 2023, seven hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Invesco Mortgage Capital Inc. The most notable hedge fund stakeholder of Invesco Mortgage Capital Inc during this period was Sander Gerber’s Hudson Bay Capital Management which owns a $4.3 million stake in Invesco Mortgage Capital Inc.
11. Riot Platforms Inc (NASDAQ:RIOT)
Number of Hedge Fund Investors: 17
Jim said “I don’t trust it” when he was asked about Riot Platforms Inc (NASDAQ:RIOT) during his program on CNBC. Cramer said he just “checked in” with Larry Williams “again” and Williams said Bitcoin has not bottomed yet and you should “stay away.”
Last month, Riot Platforms Inc said it produced 619 bitcoins in December 2023, down 9% on a year-over-year basis.
As of the end of the third quarter of 2023, 17 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Riot Platforms Inc
10. AMC Entertainment Holdings Inc (NYSE:AMC)
Number of Hedge Fund Investors: 18
A few days ago a caller told Jim Cramer during a program on CNBC that “AMC Entertainment Holdings Inc (NYSE:AMC) has got me in a hole.” Cramer commented:
“You are not doing well at all.”
Cramer said that we “don’t want AMC Entertainment Holdings Inc” because the company is not “doing well.” Cramer said we want to own stocks that “go higher.”
“Let’s understand that consumers are not going to the movies like they used to.”
Cramer also pitched Netflix as a stock to buy instead of AMC Entertainment Holdings Inc.
9. US Silica Holdings Inc (NYSE:SLCA)
Number of Hedge Fund Investors: 20
Jim Cramer’s reply was a resounding “No” when he was asked about US Silica Holdings Inc (NYSE:SLCA) during his program a few days ago.
Cramer said that you can’t own this stock in this state (New Jersey).
The stock has declined by about 12% over the past one year.
As of the end of the third quarter of 2023, 20 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in US Silica Holdings Inc. The most notable stakeholder of US Silica Holdings Inc during this period was DE Shaw which owns a $9 million stake in US Silica Holdings Inc.
8. Chegg Inc (NYSE:CHGG)
Number of Hedge Fund Investors: 25
Education technology company Chegg Inc (NYSE:CHGG) ranks eighth in our list of the stocks Jim Cramer is bearish on.
“I think it’s an exploratory situation, but I cannot press the buy button,” Cramer said of Chegg Inc.
As of the end of the third quarter of 2023, 25 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Chegg Inc.
Cramer is bearish on Chegg but he’s recommending investors to buy and hold Apple Inc, Amazon.com Inc and Meta Platforms Inc.
7. Plug Power Inc (NASDAQ:PLUG)
Number of Hedge Fund Investors: 26
Jim Cramer is highly bearish on Plug Power Inc (NASDAQ:PLUG). In a latest program, while talking about a few renewable energy stocks, Cramer said:
“Plug Power? ….Grenade! Fire in the hole!”
In December 2023 Cramer had categorically said that he was pulling the plug on Plug Power Inc.
As of the end of the third quarter of 2023, 26 hedge funds tracked by Insider Monkey had stakes in Plug Power Inc.
6. Solaredge Technologies Inc (NASDAQ:SEDG)
Number of Hedge Fund Investors: 27
SolarEdge Technologies, Inc. (NASDAQ:SEDG) ranks sixth in our list of the stocks Jim Cramer is bearish on. Cramer said “no” when he was asked about the Israel-based solar technology company.
Cramer said the stock is too volatile as it “bounces four points and then it goes down again.”
Cramer said this stock is too hard to own.
Out of the 910 hedge funds tracked by Insider Monkey, 27 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in SolarEdge Technologies, Inc..
Unlike Solaredge, Jim Cramer is bullish on Apple Inc, Amazon.com Inc and Meta Platforms Inc.
During its Q3 earnings call in November 2023, Solaredge management talked about guidance and business updates:
“We expect our annual non-GAAP tax rate for the entire 2023 to be within 22% to 24%. GAAP net loss for the third quarter was $61.2 million compared to a GAAP net income of $119.5 million in the previous quarter and GAAP net income of $24.7 million in the same quarter last year. Our non-GAAP net loss was $31 million compared to a non-GAAP net income of $157.4 million in the previous quarter, and a non-GAAP net income of $54.1 million in the same quarter last year. GAAP net diluted loss per share was $1.08 for the third quarter compared to a GAAP net diluted earnings per share of $2.03 in the previous quarter, and a GAAP net diluted earnings per share of $0.43 for the same quarter last year. Non-GAAP net diluted loss per share was $0.55 compared to a non-GAAP net diluted earnings per share of $2.62 in the previous quarter, and non-GAAP net diluted earnings per share of $0.91 in the same quarter last year.
As mentioned by Zvi, we expect that the stabilized solar revenue levels after the inventory correction has run its course will be approximately $600 million to $700 million quarterly. Under this scenario, corporate non-GAAP gross margins are targeted to be 30% to 32%, including approximately 500 basis points of benefits from IRA manufacturing tax credit and operating profit margins are targeted to be at 11% to 14% after implementing cost reduction activities. I reiterate that this scenario is based on no improvement in demand from our third quarter sell through levels and assumes no incremental revenues or margin from new products. Turning now to the balance sheet. As of September 30, 2023, cash, cash equivalents, bank deposits, restricted bank deposits and investments were $1.5 billion.”
Read the entire earnings call transcript here.
ClearBridge Select Strategy made the following comment about SolarEdge Technologies, Inc. in its Q3 2023 investor letter:
“Solar energy technology companies SolarEdge Technologies, Inc. (NASDAQ:SEDG) and Shoals, meanwhile, saw headwinds from destocking in the U.S. and Europe. U.S. demand could slow further due to new net metering rules that reduce the value to consumers from sending excess residential solar energy back to the grid. SolarEdge, which makes inverters for solar systems as well as residential and commercial battery systems, is also facing rising battery competition in the U.S. from Tesla.”
5. Robinhood Markets Inc (NASDAQ:HOOD)
Number of Hedge Fund Investors: 28
Jim Cramer was recently asked about his thoughts on Robinhood Markets Inc (NASDAQ:HOOD). Cramer said Robinhood Markets Inc’s (NASDAQ:HOOD) platform has “too much exposure” to options and Bitcoin. Cramer said Robinhood Markets Inc should have more exposure to “basic customers.” He recommended the questioner to buy Charles Schwab instead.
As of the end of the third quarter of 2023, 28 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Robinhood Markets Inc. The most notable hedge fund stakeholder of Robinhood Markets Inc during this period was Catherine D. Wood’s ARK Investment Management which owns a $322 million stake in Robinhood Markets Inc.
4. Fluor Corp (NYSE:FLR)
Number of Hedge Fund Investors: 31
Engineering and construction company Fluor Corp (NYSE:FLR) is one of the companies Jim Cramer is recommending investors to stay away from. Answering a question about Fluor Corp in a program last month, Cramer said Fluor Corp has “missed the quarter more times than, I think, they have made the quarter.” Cramer said even though he likes the infrastructure theme he’d still recommend staying away from the stock.
As of the end of the third quarter of 2023, 31 out of the 910 hedge funds tracked by Insider Monkey had stakes in Fluor Corp. The biggest stakeholder of Fluor Corp during this period was Israel Englander’s Millennium Management which owns a $123 million stake in Fluor Corp.
3. Ferrari NV (NYSE:RACE)
Number of Hedge Fund Investors: 31
Jim Cramer said “it’s hard” when he was asked about Ferrari NV (NYSE:RACE) stock a few days ago during his program.
“I’m going to have to say let’s take a pass on Ferrari.”
As of the end of the third quarter of 2023, 31 out of the 910 funds tracked by Insider Monkey had stakes in Ferrari NV. The most notable stake in Ferrari NV is owned by Paul Marshall and Ian Wace’s Marshall Wace LLP which owns a $130 million stake in Ferrari NV.
2. Illumina Inc. (NASDAQ:ILMN)
Number of Hedge Fund Investors: 40
California-based biotechnology company Illumina Inc. (NASDAQ:ILMN) ranks second in our list of the stocks Jim Cramer is bearish on. Recently, a caller asked Cramer in his program about his thoughts on Illumina Inc..
The analyst said Illumina Inc. is a “second rate Danaher” and while there’s no harm investing in second rate companies for now Cramer thinks it’s best to just go for Danaher and said “we are not gonna go by Illumina.”
Cramer said for now we are going to put the “second raters” aside for a moment. Jim Cramer has long been a believer of buying best of breed stocks in different sectors and his thoughts on Illumina Inc. allude to a similar thesis.
In early January Cramer said that Illumina’s story is uncertaint and “too messy.”
Patient Capital Management stated the following regarding Illumina, Inc. in its fourth quarter 2023 investor letter:
“We entered Illumina, Inc. (NASDAQ:ILMN), another healthcare name, in the quarter. A previous market darling, Illumina has declined from a high of $524 in 2021 to a low of $92 in 2023. We started adding near the lows. The company is a leader in genomic sequencing but made an ill-advised acquisition of Grail, a blood-based multi-cancer early detection product, in 2021 for $8 billion. The company completed the acquisition before European regulators could complete their antitrust review setting off years of regulatory back and forth. A new management team, new board members, an activist campaign, and an ordered divestiture of Grail later, and we believe we were able to buy a market-leading compounder at the point of maximum pessimism. Despite increased competition in the genome sequencing space, Illumina continues to be a leader with ~80% market share today. With the divestment of Grail, the company will return to a pure-play sequencing company with a drastically improved margin and FCF profile (22% operating margins core ILMN vs 8% with Grail) since Grail has been a cash drag of >$600m annually. Ex-Grail, we believed we were paying a market multiple on 2025 earnings for a market leader with strong cash generation and significant future growth potential.”
1. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 81
Jim Cramer has been bearish on Tesla Inc (NASDAQ:TSLA) since the start of the year as he famously excluded Tesla Inc from his list of favorite Mag. 7 stocks. After Tesla Inc posted fourth quarter results that missed estimates on both EPS and revenue, Jim Cramer tweeted:
“We could look the other way and just decide this Tesla Inc quarter was an anomaly. Or we could just say “and then there were six.” But to ignore what is happening to Tesla Inc’s (NASDAQ:TSLA) stock or to avert your ears from last night’s call seems too glib right now.”
The fourth quarter was also worrying for many Tesla Inc bulls and several analysts said Tesla Inc’s (NASDAQ:TSLA) guidance shows signs of trouble ahead.
As of the end of the third quarter of 2023, 81 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Tesla Inc.
O’keefe Stevens Advisory stated the following regarding Tesla, Inc. in its fourth quarter 2023 investor letter:
“In my Q4 2022, l made three predictions: 1. One of our top 25 holdings gets acquired 2. TSLA is a sub $200B market cap by the end of 2023 3. Crypto, the final blow.
Tesla, Inc. (NASDAQ:TSLA) is a sub $200B market cap by the end of 2023. Grade: D. TSLA performed contrary to expectations, appreciating approximately 100% in 2023 and ending the year with an $880 billion market cap. We were “just a bit outside,” but I’m not convinced our reasoning was flawed.
The typical strong correlation between earnings estimates and stock prices did not hold for TSLA during the year. Positive revisions suggest a company outperformed expectations, resulting in a higher price/valuation. Negative revisions suggested estimates were too high, and the stock should decline to meet a weaker outlook…” (Click here to read the full text)
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Disclosure. None. Jim Cramer is Bearish on These 12 Stocks was initially published on Insider Monkey.
