Whiff of Fresh Cash Makes Telecom Smell Sweet
By James J. Cramer
09/11/2002 09:58
Beleaguered telecom investors, take heart. Buried in the Wall Street Journal story about how WorldCom's WCOEQ former CEO John Sidgmore might have been too close to Bernie Ebbers -- being Bernie's number two and all -- was a note about how a major institutional investor might invest between $2 billion and $5 billion in the company.
Wow! So there was a buyer. There was fresh capital. Who was it? Does he still exist? Will he now invest in Qwest Q , a stock I own and am thinking about buying more of this morning because of this blurb? Was it Warren Buffett, who seems very committed to Level 3 LVLT ?
Throughout this miserable telecom debacle, the only fresh cash being injected into the group has come from Buffett. All the rest has come from already committed players who are exhausted or tapped out. This new hope, which we know nothing about beyond what is mentioned, tells me that we are, once again, flirting with a real bottom in the sector.
For months, those had been dangerous words as each "bottom" pancaked into another "bottom." No bottom.
But that hasn't been the case for the last two months. These stocks, the ones that will make it, have stopped going down. They have stopped going down because there is fresh cash around -- now we know it for sure -- and there are new investors willing to come in and rebuild the sector.
I continue to think you have to make a stand with these stocks. I have bought a basket of the biggest disasters left standing, in addition to the Verizon VZ I already owned, on my personal account. ( Click here to sign up for Action Alerts PLUS and I'll tell you about my trades before I make them.) All my career I have looked for situations where the risk can be defined and limited but the reward is expansive. That's how I feel about this sector right now; more so after reading about the billions on the sidelines ready to come into a company far more broken than the ones that remain. |
