Cramer on ENE - Waiting for Enron's Bottom, RealMoney.com
Waiting for Enron's Bottom
By James J. Cramer
10/30/2001 09:17
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You want to know when you can buy Enron ENE ? It will have nothing to do with the fundamentals. I am pretty sure that the investment banks will do whatever is necessary to keep this oil and gas version of Long Term Capital Management, the hedge fund that blew up, in business, if only because it was everybody's best client.
In these days, though, when concentration of holdings among mutual funds is still the rage, as idiotic as it is, all you need to know about Enron's bottoming is when Janus is done selling it. Janus' aggressive buying -- the fund owned 50 million shares of this thing not long ago, which is a staggering concentration -- moved the stock up to begin with. My sources indicate that Janus has been dumping the stock. I don't think you can possibly make a decision whether to buy it without knowing when Janus is done. That's the key material fact, not whether Enron gets the credit line.
The game wasn't always like this. Other than Ken Heebner in the '80s, most mutual fund managers didn't try to be bigger than the market. They didn't try to move up stocks by buying. And they certainly didn't wreck stocks on the go out.
Ah, but the years 2000 and 2001 have brought about a different paradigm. When these mutual funds dump, they dump terribly and really damage the stock, which then damages the company, which then damages the company's credit which then further damages the stock again. It is a really vicious circle that starts with the selling by the funds that created the darling.
I wouldn't touch this stock unless I knew that Janus was done selling. Of course, that will be a big secret, because Janus sure isn't going to tell you and neither is the broker going to tell you. I have had brokers on the sly tell me when these folks have finished, but I fear that Janus will finish with one broker then just go to another, as that is also their "style" of trading. I put quote markets on style because the reality is that a "style" would mean they know how to trade out of a big position, and these folks really don't. Of course what they should have done is gotten a bid for 50 million shares down two or three points rather than play this drib and drab game. But they never did learn to sell at that shop, which is another reason why you can't do business with them now that the market is no longer straight-up.
So, there really will be no way of knowing until you see the volume of this stock rise and the stock itself start going up. For those of you who believe Enron will make it, it is best to miss the first two points just to be sure Janus is done. I will keep my eyes out for you, too.
We'll spot the bottom, if there is one, together. |
