قالب وردپرس درنا توس
Home / Business / Occidental Petroleum's deal with Buffett is bad advice

Occidental Petroleum's deal with Buffett is bad advice



CNBC's Jim Cramer on Friday said that Occidental Petroleum borrowed a "bad advice" $ 10 billion from Warren Buffett to promote a bidding war with Chevron for Anadarko.

To increase enough capital, Occidental now has a loan from Berkshire Hathaway with an 8% interest rate, which is worth as much as $ 20 billion, he said. It could be an "albatross around the company's neck," he added.

"It's staggeringly expensive money," said the "Mad Money" host. "Occidental is a big company with a solid balance, and the Anadarko deal gives lots of reason. They can make a normal bond bid and get a much lower interest rate."

However, Buffett did a good move that has "incredibly favorable terms," ​​Cramer said. The 8% rate is much more than what it would have cost Occidental to get a bank loan, he said.

"If you are a shareholder, you should hate this deal," he said. "Occidental's stock pays a very high dividend that today gives 5.4%, but that dividend looks much less attractive when you discover Buffett getting 8% and he gets over you in the capital structure. I find it wrong. "

However, Occidental CEO Vicki Hollub loves the support of Buffett, and so she was willing to pay through the roof, Cramer said. And there was a need for speed to compete with Chevron, which has a larger bag, he continued.

"Think about it: If the oil price takes a header, Occidental will be on the hook for a giant cash box. They will have a much harder time paying it back," Cramer said. "You don't play with the fate of your business, but I think that's what Hollub can do here."

Cramer compares Occidental's loan to Tesla's loan strategy here

Cramer's week ahead

One man goes Previous screens for a TV studio on the floor of the New York Stock Exchange (NYSE) before the end clock May 1, 2019 in New York City.

Drew Angerer | Getty Images

The red hot market will be tested when Uber goes public next week, Cramer says.

Investors should be concerned about foam – unsustainably high stock prices – especially in the market economy market, because there is a lot of enthusiasm for buying stocks, he said, pointing out Beyond Meat's second day rally Friday after playing 163% on their Thursday debut.

With an additional 263,000 new non-farm payrolls last year and low inflation, Cramer said conditions are ideal for the Federal Reserve to maintain interest rates wherever they are – an encouraging note for the host.

"We have a swap train on a market, and I would like to see the slimmed-down thing cooled for more than one session or two," he said. "It shouldn't be that easy to make money because, trust me, periods like this, never last that long, and they almost."

Get Cramer game plan here

Don't go hunting cycles

Traders work on the floor on the New York Stock Exchange (NYSE) on May 3, 2019 in New York City.

Spencer Platt | Getty Images

The key to playing stocks over the business cycle is finding out when the institutional investors will be triggered to buy and sell their holdings, Cramer said.

"If you wait for a specific cycle to beat, you will be late – then there is clear evidence, you have already missed the move," he said. "On the other hand, if you try to move too early and the cycle does not turn around, you may end up being obliterated. Therefore, be very careful before trying to anticipate a trip, but if you do it right, reward it is so abundant that it is almost always worth trying. "

There is a division between the actual bend in a business cycle and its perception, Cramer said. The art of tipping the cycle is subjective, and too much optimism can damage a portfolio if the cycle is not materialized as predicted, he added.

He suggested that investors think of "No mountain high enough", the timeless duet sung by Marvin Gaye and Tammi Terrell, when stocks gather well in advance of everything that seems to be good news.

"You don't bet when the business will jump back, you bet on how patient the other money managers will be," he said. "If there is no deep enough for any of these bigger dogs, well, it's the time frame. When you can't play the game, you have to play the players."

Cramer reviewed what he thinks has been the most bizarre, yet lucrative, fighting over industries in recent weeks here

Artificial bias

NV Tyagarajan, CEO of Genpact.

Lucy Nicholson | Reuters

Cramer was confused to find out that there might be confusion in artificial intelligence. Tiger Tyagarajan, CEO of digital and data professional service firm Genpact, explained to the host that AI is based on data fed into it.

If a collection of data has a bias in it, the slope can be implanted into machine learning, he said.

"Let's say someone has had a bias in learning. You take all the data you prepare, the machine continues to do what you did, so the bias continues, "Tyagarajan said.

To remove bias, rules must be inserted to counteract it, he said.

"If you allow regular AI to work with old data, you get the new one that is old," Tyagarajan.

Capture the entire interview here

Homework done

Arkady Dobkin, CEO of EPAM Systems Inc.

Andrey Rudakov | Bloomberg | Getty Images

Cramer was captured by the latest lighting rounds that suggested the Rapid7, Inogen and EPAM Systems bearings.

The host took a deeper dive into the companies and gave his thoughts on the companies. [19659002] Review Cramer's homework here

Cramers lightning round: IPG is cheap, but don't buy it here

In Cramer's lightning round, "Mad Money" host bought and sold conversations to viewers' inventory of the day [19659002] Interpublic Group of Companies Inc: "Very cheap advertising stock. I'm not going to say pull the trigger, but it's cheap.

Cedar Fair LP:" This youngin likes yield. I do that too. I think it's good. It's better, honest, than Six Flags. "

NextEra Energy Inc:" You have a good one with Nextera. It's a growth tool. There are very few of them in this country and you have one. I say buy, buy, buy. "

Questions to Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into the Cramer world? Get him up!
Jim Cramer Twitter – Facebook – Instagram

Questions, comments, suggestions for the website "Mad Money"? Madcap@cnbc.com


Source link