Jim Cramer, the host of Mad Money, recently raised concerns about the current state of the market, particularly highlighting what he perceives as signs of “excess”. He also examined what he referred to as “Trump trades,” or stocks that Wall Street has been gravitating towards in anticipation of what President-elect Donald Trump’s administration might bring.
He pointed to private prison operators and oil service companies as examples of sectors benefiting from these expectations. Focusing on oil, Cramer noted that a number of smaller oil service stocks have surged this month. He pointed out:
“Now one of the few things that we know for certain about President-elect Trump’s economic agenda is that he wants our country to produce even more oil than it’s doing. His new pick for treasury secretary, that’s Scott Bessent, has advocated for the country to produce an incremental 3 million barrels of oil per day.”
READ ALSO Jim Cramer’s List of 7 Energy Stocks for the Trump Trade and Jim Cramer’s Game Plan: 13 Stocks in Focus
Cramer sees this as positive news for oil service companies involved in the extraction of resources. However, he also warned that this surge in production could exert downward pressure on oil and gas prices, much like what occurred in 2016. Despite this, Cramer highlighted that the major players in oil services have posted impressive gains in November, with some smaller operators making unexpected appearances on the list of the market’s hottest stocks. Shifting to the cryptocurrency market, Cramer addressed the significant rise in Bitcoin’s value. He noted:
“Now that rally is taking up practically the whole cryptocurrency ecosystem… Obviously, the gains in crypto, especially the Bitcoin ecosystem, seem excessive, but again, they aren’t without reason. We’re going from a Biden regime that was pretty antagonistic towards crypto to a second Trump administration that promised to be incredibly crypto-friendly.”
Cramer also pointed out that under the Biden administration, the government had been more paternalistic, aiming to regulate and control crypto, while Trump has promised a much more supportive stance towards Bitcoin. Cramer believes that a Trump administration that actively supports Bitcoin could lead to significant hoarding of the cryptocurrency, especially in the context of a strategic Bitcoin reserve.
This could benefit Bitcoin holders or “hodlers,” as they are often called in the crypto community. He also suggested that owning Bitcoin or an ETF that tracks its performance could serve as a hedge against potential inflation, particularly if the government continues to print money to address its deficit. Cramer voiced his own support for Bitcoin, saying, “call me in favor of owning Bitcoin,” and also recommended purchasing Ethereum, which he owns, despite it lagging behind Bitcoin in recent performance.
“I’m a believer, but these are hedges for me, and if you’re hoarding crypto, be ready for the breakdown no one thinks can come.”
Jim Cramer Discussed 13 Stocks Poised to Benefit From the New Administration
Our Methodology
For this article, we compiled a list of 13 stocks that were discussed by Jim Cramer during a recent episode of Mad Money on November 25. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
13. Federal National Mortgage Association (OTCQB:FNMA)
Number of Hedge Fund Holders: N/A
Cramer noted that the rallying of Federal National Mortgage Association (OTCQB:FNMA) stock in November was understandable as the election turned out in Trump’s favor.
“What else? Oh, here’s a tough one. Fannie Mae and Freddie Mac, two government-sponsored enterprises that prop up the mortgage market, have seen their stocks more than double on hopes that Trump will recapitalize and release these companies. I don’t know if you remember them from the Great Recession. Oh boy, they were front and center. I don’t wanna get too deep in the weeds on this tonight because it’s a complicated situation, but in general, it makes sense for Fannie and Freddie to rally on this Republican sweep.”
Federal National Mortgage Association (OTCQB:FNMA), commonly known as Fannie Mae, provides mortgage financing solutions in the United States, including the securitization and purchase of various types of residential and multifamily mortgage loans, as well as credit enhancement for bonds and investments in housing projects. It reported a strong performance in the third quarter, achieving $4.0 billion in net income.
This marked the company’s twenty-seventh consecutive quarter of positive results, reflecting consistent operational success. Its net worth grew to $90.5 billion, a notable increase. Since the beginning of the year, the company has reduced its minimum regulatory capital shortfall by $17 billion, further strengthening its financial position.
Despite the ongoing challenges in housing affordability, the Federal National Mortgage Association (OTCQB:FNMA) continued to provide vital liquidity to the housing market. In the third quarter, the company facilitated $106 billion in liquidity, helping 383,000 households with purchasing, refinancing, or renting homes.
12. Federal Home Loan Mortgage Corporation (OTCQB:FMCC)
Number of Hedge Fund Holders: N/A
At the time of writing on November 28, Federal Home Loan Mortgage Corporation (OTCQB:FMCC) stock was up 156.56%. Here’s what Mad Money’s host had to say:
“What else? Oh, here’s a tough one. Fannie Mae and Freddie Mac, two government-sponsored enterprises that prop up the mortgage market, have seen their stocks more than double on hopes that Trump will recapitalize and release these companies. I don’t know if you remember them from the Great Recession. Oh boy, they were front and center. I don’t wanna get too deep in the weeds on this tonight because it’s a complicated situation, but in general, it makes sense for Fannie and Freddie to rally on this Republican sweep.”
Federal Home Loan Mortgage Corporation (OTCQB:FMCC) operates in the U.S. secondary mortgage market, purchasing, securitizing, and guaranteeing both single-family and multifamily loans, while managing associated credit, market risk, and investments. For the third quarter, the company reported net income of $3.1 billion, reflecting a $0.4 billion increase year-over-year.
This growth was mainly attributed to a decrease in non-interest expenses, as the prior year’s figures included a one-time $0.3 billion additional expense accrual. Net revenues also saw a 3% increase from the previous year, totaling $5.8 billion, largely driven by higher net interest income.
As reported by the Wall Street Journal in September, allies of Republican candidate Donald Trump, along with bankers, have been considering plans to end government control over Federal Home Loan Mortgage Corporation (OTCQB:FMCC) and Fannie Mae.
Among the proposed paths for privatization is a strategy to bypass congressional approval and instead work through the Federal Housing Finance Agency (FHFA), which oversees both entities, as well as the U.S. Treasury Department. This follows previous, unsuccessful attempts to free the mortgage giants from government control, including those made during the Trump administration.
