Sumner Redstone's Brilliance

The separation of Viacom into a value and into a growth entity is brilliant, brilliant! And exactly what Wall Street wanted. He joins a pretty prestigious company frankly, notably Kirk Kerkorian. Hey, Kirk, that old dog just produced eight points of gain. Who knows what Sumner can do?

Unless those of you playing the home game have labored on the buy side you don’t know that this is a buy. On the buy side there are three giant constituencies. 1) The hedge fund cohort who lives for UPOD. Under promise, over deliver. Redstone has savaged the hedge fund community with his repeated over promise and under deliver. The hedge funds never want to hear the name Viacom again and Sumner you’ve taken care of that. Then there’s the value mutual funds.

These guys are fuddy duddies. They’re never going to understand the value of MTV or any of those ancillary MTV stations that my kids would pay hundreds of dollars for if I let them have a credit card. They’re never going to understand the annuity and growth streams of Nickelodeon; they think its all hype. The fuddy duddie value guys like dividends, big profit, something you can sink your teeth in. They hated that portion of Viacom.

Then there is the growth cohort, the momo’s, momentum guys. They love Nick; they love MTV, the movie biz. They couldn’t stand radio; they don’t have much love for television either. They think those are no growth businesses with really bad demos. What Redstone has done has created pure plays for both groups. He’s banned the hybrid.

You want value how about the monster cash flows from radio and outdoor advertising. How about the huge sums that CSI makes and the rest of that TV network, even as it is somewhat demographically challenged.

CBS Chairman Les Moonves, you know what he knows how to do? He can schmooze with the best of those value guys. He even looks like one of them! He can play the role, sit around the country club and swap stories. He’ll be perfect, play some golf Les! Give us a big dividend too, a big one! ALL ABOARD. How about what this has done for the growth junkies. All the high growth without the rusty old anchor of radio, the ballast of theme parks. You gotta love it. The only problem I see it how long are these two companies be able to stay independent? I think there’s gonna be buyers for both of them. That’s what I call a high quality problem.

Bottom line: One point off its 52 week low (bells going off) BULL- Viacom is right

Q: Has media sector moved from consolidation to spin-offs?

A: I’m kind of agnostic about this sort of thing. I think it’s only far to say that right now we like simple. We don’t like the mosaic that is Time Warner (TWX) What’s that levered to? Time Magazine, instant messaging, books? We need simplicity and Viacom, 1-1=3. BULL Viacom’s for me.

Q: You think its time to blow out Disney (DIS) and pick up Viacom?

A: When I started this show, Mad Money, I started the show telling people that Disney was a good buy and I’m not backing away from that. I always thought the problem at Disney was the lack of leadership at the top. It’s too early for Iger to make his mark yet and I’m not backing away. I don’t think you need to sell one to be in another. BULL.

Remember Turbo Chef (TCF) the other day?

Up another smacker today, lot of talk about some good contracts coming. Don’t forget it switches to NASDAQ and symbol OVEN next week.

Sears (SHLD)

BULL - Up 6% today, better than a sharp stick in the eye eh?

Best Buy (BBY)

How bout the Best Buy – BULL – you know I continue to like that stock even up again.

Kohl’s (KSS)

BULL. Bizarre things happen after they are finally free of the mud that has pinned them to the ground. Analysts get off the bus right at the wrong moment. Today KSS got a downgrade from someone in the Midwest from Baird. It hasn’t been much of a stock since it became a national company. The company has been inconsistent in its delivery, a little bit like the GAP. Finally though, KSS has broken out and is ready to run. ALL ABOARD, ALL ABOARD, ALL ABOARD. It’s got some really good numbers a head of steam and some incredibly easy comparisons. It’s broken free the mud that it’s been stuck in. What is this guy from Baird, this fella, do today? He downgrades KSS. As I like to say in my written product – WRONG!

You gotta understand that when a stock is done being stuck there are a lot of people who have been pushing the bus the whole time and they are so relieved that the bus is finally moving that they are saying, Woo I’m out of here, thank heavens, I’m downgrading KSS. You know something; once its free the last thing you want to do is get off the bus. You want to say all aboard.

Now, what do you do if you are playing the home game on the KSS? I would use this moment to be able to buy the stock. BULL. I would use the Baird downgrade to make my move and buy the KSS even as I believe that some of the retailers out there, notably my favorite, URBN, have reached nose bleed territory on fabulous June weather and inventories. Just like SHLD where a lot of people got off the bus cause they felt it was stuck, just like the TCF, once they start rolling never get off the bus when the bus gets going, NEVER. Buy KSS. Some people think that KSS is just for women, I know plenty of men who shop there. I even know people who buy there clothes exclusively at KSS. Look at me, I know I sound like a paid advertisement for KSS, but that’s how much I like the stock right now. Might I add that the stores are pretty darn good too.

Q: Is it time to ring the register in the retail sector?

A: We never get angry at anybody who takes a profit on Jim Cramer’s Mad Money. If you’re in the URBN, BEBE, ANF, AEOS it wouldn’t be bad to take a little profit. The bottom line is: These stocks are going to sell off at the end of the month cause the expectations are so high and you’re gonna have to get back in them cause they’re still the best thing going.

Scandal Payouts

What if C and JPM paid everyone $45? You should care about scandal payouts. Are these banks really the guarantors of what they sell?

Let me tell you a story I learned when I first got to Goldman Sachs in the 80’s. My boss there used to sell vacuum cleaners before he sold stocks and bonds. He told us you made a lot less money selling vacuum cleaners than you did stocks and bonds because you can always take back vacuum cleaners, money back guarantee, they’re risk free. Stocks, bonds, are you kidding? It’s always been caveat emptor, buyer beware. When something is buyer beware and can’t be taken back you get a bigger commission. Not anymore though.

These huge payouts for these banks are outrageous. They repeal the whole notion of the customer having any responsibility. Believe me; these customers had all the resources and intelligence that was possible. The customers had all the ability to know more, if not tons more, than the sales people who put the products in their pockets. They don’t deserve to get their money back from the brokers, the brokers didn’t commit the frauds and they often didn’t know them. Something sinister is going on here. Let’s call it the high payout low multiple factor. That’s where you’re in t a business with low margins, underwriting debt in this case, and you have to insure the debt to all those who really should know better like the institutions who are recouping some of those losses in Enron and WorldCom.

These payouts remind me of the massive, and I think very wrong, payouts that Pharmaceuticals have had to make to people who took $200-$300 worth of drugs. While not as egregious as the pharmaceutical payout where you take $300 in pills and get $3 million in damages, it is in many ways worse. I bet JP Morgan and Citi made fractions in profits on the bonds they underwrote versus what they have to pay out and there is no way they could have found these frauds. More important, though unlike the patients who took the drugs in the pharma example, these buyers were totally and utterly sophisticated. They don’t deserve the states protection. It is outrageous. The people extracting cash from Citi and JP Morgan knew better and they absolutely don’t deserve this payout.

But Jim you ask, what about the everyman who had his savings ruined because these firms got their analysis wrong? Doesn’t JP Morgan have a moral obligation to protect these people? PERSONAL FOUL! A moral obligation, are you kidding me, you’ll never hear it out of my mouth on TV again. Look, I’m a pretty compassionate guy but I’m not here to have a discussion about ethics. Put away the Aristotle, Aquinas and Kant they don’t even have anything on securities law as far as I know.

Bottom line: You repeal caveat emptor you take away the upside. This is no longer a great group these financials, even after they put the payouts behind them and the loss gets discounted in the stock prices. The permanence of the guarantee is no a ridiculous, an utterly ridiculous cost of doing business – BEAR – and I am infuriated by it.

Sheriff Jim

My goal here is to introduce you to some stocks that have been shooting stars. Now we know that the trajectory of a shooting star isn’t necessarily always positive.

Stephen Hosmer, CFO of Royal Energy (ROYL) joins Cramer:

Cramer: What happened that your company increased 33% in value yesterday?

Hosmer: I believe that the market finally recognized what we’ve been trying to do for 20 years. To efficiently produce domestic natural gas and to adding supply to this country that sorely needs that supply.

Cramer: My sources indicate that there have been times when you have had trouble filing your quarterlies and annuals in a timely manner. You’re the CFO have you fixed that up?

Hosmer: Yes we have. With all of the additional reporting requirements it is much more onerous than it used to be and we are getting that tuned in.

Cramer: How big are these finds? How much is there? Is there a lot there? Hasn’t a lot of it already been discovered?

Hosmer: A Department of Energy study that was done about 10 years ago estimated that there were 317 trillion cubic feet of gas left in the domestic U.S. and that over 50 trillion feet was in California.

Cramer: And you guys have how much of it do you think? The reason I’m playing the skeptic here is because when a stock has had a 33% increase I think the operative thing to do is to take profits. I’m trying to figure out why not to tell people to ring the register on this great gain.

Hosmer: For our company, we’re a substantially family owned company. We had gone public over 15 years ago. Went onto the NASDAQ in 1996. We’ve been consistently executing on our strategy over 20 years. I believe that right now the market is recognizing that we have value and I think we’ve got a lot more growing to do. But we haven’t sought out stellar three digit gains. We’ve been consistently executing on our business plan for twenty years.

Cramer: Excellent. I like oil and gas. I am playing a guy on TV who is excitable but I will tell you this. I believe that it is so much better to own a CHK, an ECA than to buy a stock like ROYL up here. I have to take a page from my own book. When do you buy ROYL? Last week, not tomorrow.

Cramer talks with DayStar Technologies (DSTI) CEO, Dr. John Tuttle

Cramer: How important is your cost structure versus other guys with solar and is that why your stock went up 16% yesterday?

Tuttle: Well I think the cost structure for our product is certainly anticipated to be better than what the mainstream product is today. We are based on a material that doesn’t require silicon. We are also the form factor of the material is a much thinner material and hence the energy intensity and the amount of raw materials needed to make the silver cells and the manufacturing equipment and the labor required and the way we’ve designed the manufacturing systems and factory all point to cheaper solar cells.

Cramer: On Monday you announced that you had reached a deal to sell “some” solar cells to Blistrom(?) of Germany. What is some? Is it material?

Tuttle: Actually, we announced the German order last Thursday and this firm in Germany has agreed to buy a substantial portion of our production capability over the next four years. Right now, since we have different product lines they’ve agreed to buy a substantial portion of our mainstream product line, we call is Terra Foil, it’s a flexible solar cell. They’ve agreed to buy up to 50%, maybe as much as 75% of that product line. We also have the ability of producing other products.

Cramer: Solar land stocks, my take have been on fire. I think this stock has more legs but please, remember (ring ring sound), nothing the matter with taking a profit.

AM I DIVERSIFIED?
Diversification is the only free lunch. No one sector can take you down if you are diversified.

PORTFOLIO: WAG, PFE, STZ, XOM, BUD
A: WAG – we know is best of breed drug store. PFE – one of the finest pharma companies although not my favorite. XOM – not my favorite but we like the dividend, growth prospects. BUD and STZ – two alcohol plays, that’s a pair, this is not Texas Hold’em. I need you to schnitzel out of the BUD even though I know that Warren Buffett’s buying it. Keep the STZ and buy a bank. Talked about JPM, C.

PORTFOLIO: NWS, SBUX, LEH, BA, DWA
A: Jim gets his briefs at Target. SBUX – Excellent place to get a cup of coffee also a good retailer. LEH – massively good qtr there. BA – Aerospace and defense we like that. DWA – uh oh I smell a pair, NWS and DWA are too much alike. I need you to sell the DWA, they blew the quarter anyway and pick up… how bout… an OIL!

Disclaimer: I AM NOT JIM CRAMER. I sometimes write the summary in first person because my brain doesn't quite move fast enough to process and type at the same time, so please excuse that. This blog has no affiliation with Jim Cramer, CNBC, or Mad Money. If you'd like to contact Jim Cramer email him at madmoney@cnbc.com, or call 1-800-743-CNBC. This summary is done for you and I to be able to better track and follow Jim Cramer’s comments. The show goes by quickly so I try and catch as many keywords as possible for each stock because of this, ACCURACY IS NOT GUARANTEED but is however strived for.

NOTE: I've added today's closing price to each of the stocks listed below. The "m" next to the stock symbol links to the stock on moneycentral.msn.com while the "y" does the same to finance.yahoo.com

TTWO - m y - 28.58 - Take-Two Interactive Sft. - You like kids doing grand theft? SELL SELL SELL SELL SELL SELL SELL. You should get out of that stock.
MEE - m y - 40.36 - Massey Energy Company - BULL - cheapest of the ones. Arch Coal I think has had too big a move
IMCL - m y - 33.87 - ImClone Systems Incorporated - BEAR - Didn't like it at 43, 42, 41, 35 - reiterate my sell at 33. SELL SELL SELL
AMGN - m y - 59.84 - Amgen, Inc. - BEST of breed, we like that also like DNA
WAG - m y - 46.11 - Walgreen Company - BEST OF BREED - BULL - we like that - tell the buckeyes to go buy it
QSFT - m y - 13.25 - Quest Software, Inc. - bull - be careful, other stocks I don't like SEBL, ORCL
IVGN - m y - 77.67 - Invitrogen Corporation - ring the register - you need to schnitzel out of that and get some DNA my friend
ASPT - m y - 10.25 - Aspect Communications - not one of my favorite stocks, I don't like anything in the telecom business - BEAR
IDNX - m y - 5.15 - Identix Incorporated - BEAR - not for me also Laser Card is another one I don't want to touch
BRK.a - m y - 83610 - Berkshire Hathaway Inc. - BULL - great company buy a lot
MSO - m y - 27.56 - Martha Stewart Living Omnimedia Inc. - BULL - I'm now thinking she's out of the woods and I'm pressing the bull. New position for me.
NSI - m y - 13.53 - NutriSystem Inc. - I don't want no NSI - why don't you just work out harder BEAR
TZOO - m y - 36.04 - Travelzoo Inc. - NO! Sell sell sell sell sell sell sell sell sell - this is a very overvalued company. Machine gun sound
DPH - m y - 5.26 - Delphi Corporation - Hallelujah they're gonna stay out of bankruptcy - you should ring the register - take the profit above 5.
UPS - m y - 69.85 - United Parcel Service - Love the guys at UPS - worried about the postal service - said I wanted to buy it under 70 and now here I am, like a chicken afraid to pull the trigger. Gotta tell you something - BEAR - In that group right now
EK - m y - 27.89 - Eastman Kodak Company - DIVE DIVE DIVE DIVE - sell it, going under 25
HIG - m y - 75.12 - Hartford Financial Services - Good company - BULL
AMLN - m y - 18.76 - Amylin Pharmaceuticals - BULL - staying long the AMLN here - we're going to do Byetta scrips next Monday I'll give you a real hint on how its going. Stay long.
CAT - m y - 98.58 - Caterpillar Inc. - For me, cyclical exception. BULL - when they raise the dividend and decide to split the stock, enough is enough, it's working BULL
PAYX - m y - 30.43 - Paychex, Inc. - Swap out and into ADP
ADP - m y - 42.55 - Automatic Data Processing - Swap into this from PAYX
AW - m y - 8.21 - Allied Waste Industries, Inc. - More cyclical than people realize. Don't like trash game at this point in the cycle. BEAR - I would ring the register.
BF - m y - 68.22 - BASF AG (ADR) - We have enough second rate chemical companies in our own company, don't go to Germany. Rather see you in DD or DOW at 43.
DD - m y - 46.83 - E.I. DuPont de Nemours - 1st rate chemical company - BULL
DOW - m y - 47.02 - The Dow Chemical Company - 1st rate chemical company - BULL
FRO - m y - 37.63 - Frontline Ltd. (USA) - No - all over with these tankers, they've peaked. BEAR - signaling they are going to continue to go down I don't want you in them.
LF - m y - 11.4 - LeapFrog Enterprises, Inc. - Jump out the window, stay out of the stock.
KMG - m y - 74.25 - Kerr-McGee Corporation - No no. BEAR - one of the few oil companies I'm no longer recommending. I want to swap out of the majors and into the intermediates.
GW - m y - 6.88 - Grey Wolf, Inc. - BULL - land drilling with nat gas growing through the roof? That's for me.
VGR - m y - 19.31 - Vector Group Ltd. - BULL - I want MO. Swap into MO.
DUK - m y - 28.45 - Duke Energy Corporation - BULL - You know I like Anderson that CEO. He's even into the global warming thing, not bad.
GI - m y - 32.81 - Giant Industries, Inc. - Refining is for me. Like TWO more than VLO here.
VLO - m y - 75.94 - Valero Energy Corp. - ring the register, please be careful here
ANF - m y - 68.38 - Abercrombie & Fitch Co. - I want you to start ringing the register, estimates have gotten really high - still think they can beat em but I don't think it rallies after that.
DHB - m y - 8.71 - DHB Industries, Inc. - ring the register - very 2003 stock idea.
EQT - m y - 67.65 - Equitable Resources, Inc. - BULL _ Could be a sleeper gainer if we ever get rid of the Public Utility Holding act which we should by the way. Always liked the company
CYD - m y - 13.24 - China Yuchai International Limited - Isn't that one of them communist stocks? Stick with capitalism. BEAR.
GTW - m y - 3.34 - Gateway, Inc. - Personal foul - SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL DIVE SELL
SSCC - m y - 11.08 - Smurfit-Stone Container Corporation - Rather see you in Bowater
WB - m y - 50.5 - Wachovia Corporation - Not as bad as it used to be - rather see you in CBH which I think is taking it to WB
CMCSA - m y - 31.72 - Comcast Corporation - BULL - own it personally, that stock is for patient people though
CHK - m y - 22.53 - Chesapeake Energy Corporation - How do you like those guys? They come on the show when its at 18, 19. They buy a ton of stock and then it goes higher - BULL - and everybody who watches makes money - THAT'S FOR ME!mortgage calculator