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tv   Mad Money  CNBC  May 20, 2013 11:00pm-12:01am EDT

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so beautiful. avo: more travel. more options. more personal. whatever you're looking for expedia has more ways to help you find yours. >> my mission is simple. making money. we want to level the playing field for all investors. i promise to help you find it. "mad money" starts now! hey, i'm cramer. welcome to "mad money." my job is not just to entertain you, but to educate you. call me, 1-800-743-cnbc. lightning struck once, not twice two, two people this week. the good kind of lightning, the kind that puts hundreds of millions of dollars in people's
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pockets. the dow dropped 19 points, s & drifting .07% t. nasdaq declining .07%, it's worth discussing what the heck the mysterious winner of the $590 million powerball competition. hallelujah! and david clark, got billion for selling tumbler to yahoo. they've come to the right place. this is exactly what i used to do for people when i worked at goldman sachs and my hedge fund and before i went into television and my charitable trust. for those who don't have millions, or hundreds of that just yet, can you learn some very important lessons from this, too. my first stint is that you only need to get rich once. mean tag really wealthy people who are already loaded don't need to risk their money and end up needing to get rich a second time because they lost too much
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in their investments. second, all we preach diversification within your stock portfolio here at "mad money." there is a larger one. there is diversification. of course the whole span, the panaplea, someone as richard as the powerball winner and david carp has to be thinking what has gone wrong in the world, preferably gold bars, stored in countries that are the safest, yes, i care about that. these days, it would probably be banks in canada. they are more solvent than the banks in switzerland. the current freefall in gold should be of no interest to these two gentleman or well powerball, too, lady. because, really, anyone who takes a long-term perspective on gold because it can preserve its own value in times of real turbulence and social upheaval. we don't have either right now. this is a long term thing we are talking about. by the way, we have mon tore printing presses going 24/7 in a tonne of countries.
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i don't think gold is a great deal. that's not the point of long-term investing, it is investing to own god. i love warren buffet. don't let him tell you it's not investing. what else? both of these winners need to have high end real estate, meaning mansion, as well as masterworks painting, why those two? again, if you want to get rich once, you don't need inflation to eat into that wealth. it so happens the two assets that held up in periods of hyperinflation like buy mart germany before world war ii and modern day zimbabwe are paintings, the kinds you buy at soth by kristi's, the 5, 10, 15, $million price tag. i would do i verse, raw end, farm land as well as farm real estate, particularly in europe. that's the stuff that's really
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for the hundreds of millionaires. i wanted to get that in. people are sparing the lives of the rich and famous. that's the money of the rich and famous. and that leaves us with the financial information of the portfolio that, well, let's say you and i have to worry about. here's writ gets difficult. fiwere working with someone with this kind of wealth in the old day, someone with powerball or tumbler money, i wouldn't even bother with stocks. you know what, it would be a huge waste of time for these people, a waste of energy an possibly money. because stocks are all about getting rich by taking risks, historically, that is. as i said before, you only need to get rich once. so for someone with hundreds of millions of dollars, i would normally, usually divide their money among three types of assets, u.s. treasuries, municipal bonds and corporate bonds. that's right. i would make it a 100% fixed income. at least for the powerball
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player who i presume is older than item pler's car, maybe a little more risk for carp. i might be willing, if someone, if corporate were interested add a component layered on. then it would be interesting to see long-term debts pay off. in the old day, 20% in long-term treasury, 30% in a smattering of bonds, 10 years. aaas, 10% to high quality mortgage bonds, offer a little more interest or generate more income. the rest, put it all in municipal bonds, only general obligation bonds, so-called gos, it must be raised by paying taxes or tolls. i don't want revenue bonds, too risky. i would not think of that bond in any state where there is deat all time rick. so no illinois, no california in the old days. i would buy munis, i think tax for the rich has increased. i would not bet obama jacking up
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rates, because frankly these republicans don't seem to have their act together even with the irs handling them on a silver platter. so you probably ask me, why not do all muns pals? because if the democrats sweep the house, i think that may be curtailed, too. all of that is what i would normally do for someone who is super rich. that's what i would have done in the '80s and '90s and even as recently as 2009. oh, these are not normal times, now. oh, no, not for bonds. at the moment, if i were given this money, do you know, i wouldn't tell them to do any of these fixed income alternatives i just outlined at the treasury the corporates, the munis. no. i would probably but 50% in overnight cash and that would be waiting for the fed to blink because all people ever talk about is the fed will blink. one day the fed will raise rates.
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the ideal option, in particular, i am not an idealist. until they mend these rates for long-term fixed incomes for every part of the spectrum are so low that they are, indeed, dangerous. and i don't want anybody to be buying them. everyone of my usual investments that i detailed that i put rich people into would be a huge mistake here a. huge mistake. so right now, if i were managing powerball winners or david carp's new found wealth, i would do what 'are doing, i would buy higher yielding master limited partnerships or mlps, higher yielding real estate investment trusts. some of the companies that are serial dividend raisers. why these? because the wealthy are backed into a corner. they're backed into a corner of these offerings, by the fed. i have been thinking about it. you know what the fed has done here?
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they've created an austerity moment. just for the rich. that's right. the feds essentially mandated rich people will not be able to make money by stuffing their bonds into wealth yeerm. in this environment, they have to risk something to stay ahead of inflation. that's bernanke's plan, they got to risk something. they got to go buy equity, because they are taking a far more risk by taking these bonds, long-term bonds and equities are considered to hold the value over the long haul. interest rates are where they are right now for bonds, i don't how they could hold their value. bernanke made them a sucker bet. austerity for you, high yielding stocks, they are perfect. they're exactly what works right now. how about these oil master limited partnerships. i used to like buying bonds backed by tolls. like the widening of the new jersey turnpike. now there is nothing like turnpikes that yield 5% tax rates for if wealthy. those were the best piece of paper i ever sold, nothing like
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that at the moment. so let's just forget about them, stop being wishful for the days before the fed mandated austerity for the wealthy and look around for better opportunities. so mr. carp and mr. powerball winner, it will be kinder morgan energy partners for you and energized partners, too. 4.95% respectively. a 5% and change. these mlps will give you the income you need with toll-like tendencys. that's what they are. why don't we throw in williams partner, wpz, which owns natural gas assets. that is a truly growth business. get a little 6.5% yield. then we'll kind of come up with the whole yield together, yield 5 and change. feel pretty good about it. we want real estate trusts. healthcare trusts of america, which yields 4.4%. you could get a break in it as there is a secondary coming up. yes, classic dividend growers,
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stocks like johnson & johnson and general mills. two fabulous serial dividend raisers. they have terrific tax advantages as a huge percentage of the income is taxed at what half the ordinary bond companies says they will be taxed at. i know, these certainly have risks. equities have the risk. right now the risk from owning these stocks is less than the risk you get from my traditional bond heavy methods of investment for the wealthy that i detailed early in this show. here's the bottom line. you only need to get rich once. because a fed mandated bond austerity, we have no choice. the powerball winner and mr. corporate tumbler, at the moment you need dividends from stocks, not coupons from bonds. you need safety. right now the safety is higher yielding stocks than it is in much lower yielding bonds. a memo to everyone else watching, bonds is just as dangerous for you, too. stephen in colorado. stephen! >> caller: hello, jim, boo-yah. >> boo-yah.
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>> caller: gold is up, mining is coming off three-year lows. what's the plan, what should i be doing? >> when i looked over the charts this weekend. newmont mining and barrick and agnico were the worst ever. i said, don't sell these yet. less them bask. these are hideous prices you'd be selling at. let that go higher, 3% yield and sell, sell, sell. >> caller: boo-yah, jim. i have a question for you guys. i was wondering what you were thinking about cognizant solutions. >> no, s.a.p. is where you want to be. bill mcdermott does a great job. dividend and conquer. it's all about high yielding store, stocks of high working
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american companies. you feel like a million bucks? who needs the lotto. "mad money" will be right back. coming up, discount spirit airlines has risen over 60% this year. is it time to book yourself a ticket or could unforeseen turbulence put a ceiling on this stock? find out in cramer's exclusive. and later, armed and ready? the biggest names in biotech are about to unveil their latest weapons in the war on cancer. so which players are best prepared for battle? don't miss cramer's preview. plus, dr. dollars. this fresh-faced play on healthcare has run up over 30% this year alone him could it make your next visit to the doctor's office a little more profitable. don't miss cramer's explosive with the ceo of trust care america all coming up on "mad money."
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well, two month ago i did something unprecedented here on "mad money." i recommended the airlines, not just some airlines the entire group. since then, the airline names have been flying. for those of you too skeptical to own airline stock. if you think they're too bloated with ambulance sheets, history in and out of balance sheets. why don't you pick up spirit airways. the company is nothing like a traditional airline. spirit is run like an actual business. it's a small operator, 45 planes. they go more than 200 flights a day. spirit is a low, low-cost ultralow cast player. they cram more people in a plane than the competition. they charge you for carry on,
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they keep the planes in the air more hours per day. for that, they can charge much less than the competition so you can save. spirit can break even at a price of $58 a ticket. jet blue used to charge $133 per ticket to break even. best of all, spirit has no debt. they profitably expand their fleet. spirit reported they had a 3% earnings off a 42 basis. revenues came in higher than expected rising year over year. stock has given you a 22% gain since we spoke with the ceo in march. i think he has more room to run. let check in with the president and ceo of spirit airway, hear more about what the company is dog and where it is headed. how are you? >> good to see you, jim. >> an airline that beats the numbers and in untraditional way. it seems like it can continue to do so. >> we think we can. we keep our costs really low. we work him we think about the investor first.
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>> you know, you read all these things. is spirit airlines all u.s. carriers the list of the world's worst airlines. we can joke about it. in the end, there is two customers. the customer that wants to be pampered and the customer that wants to save. they may not be the same people. >> sometimes they may be the same people whether they are traveling for business, they are certainly different than when they buy their ticket and what spirit caters to, jim, is the customer that pays for the ticket themselves. they think about that and they think i may want to spend more on my husband or my wife. >> someone says, listen, they got rid of their 800-number. they got $35 for a carry-on bag, $10 charge for printing your boarding pass. now, do you just not want anybody to do these things? is that the deal, we're supposed
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to bring our water on? >> we like to incent customers to behave in ways that save us money. if you do that, we save you the money. we charge you $10 to print it. can you do it free at the website or at the kiosk. we changed the toll number toll-free number to a toll number almost six months ago. the l.a. times picked up a story and says we did it and forget disney hasn't had a toll number for 20 years. >> okay. how about this. i saw an article my friends business insider at the sky tracks thing that you finished in turkmenistan. let me ask you, does customer service in your industry, because it's been such a bizarre industry, does it just not matter? what matters is you get from point a to point b as cheap as possible? >> it does matter. there is a couple things. if you got all the best chefs in
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the world to measure, to do a ranking of the best restaurants, where would they put mcdonald's? >> it wouldn't be. it's fuel. >> that's it. that survey was business travelers. they're looking for frequency, nice lounges, lie flat business seats. all that stuff we don't do. we get you there for the lowest total price. >> you also do make money off the ancillaries. >> sure. >> that is valuable. >> we make money off the ancillaries. the great thing for the customer, it lets them customize their price. i'm not paying for your choices. i check bags, i stress the system. i pay for it. you don't bring the bag, you don't pay. >> what's interesting for me. i fly. apparently, i flew first class. other than an extra foot, they gave me a package of raisins. >> wasn't that worth it? >> they doubled the darn price because there is no competition. >> i know, they probably weren't even covered in chocolate. >> right. it's true. >> it's crazy.
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what we do, we look to try to make the total price for the ticket plus the extras less than the next best option. we get you there safely with a good smile and -- >> they care about the reviews, the airline only averages a score of 2 out of 10 on 1,100 posted reviews. do you care? >> i don't care about a survey about a different customer base. i care about what our customers say. they tell us price is above everything. >> right. >> they want the low price the lowest total price. they want to pay for what they care about. they don't want to pay for what they don't care about. >> your best friend is the justice department. they created a price that you fly well under. >> that's it. the reality, though, over the last couple years the consolidation in the industry has actually been good for the industry sector. it's stabilized capacity. it has stabilized the pricing environment. but that's meant fewer service options and generally higher
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fares that allows a carrier like us to create that low-cost option and give customers an alternative. >> why have the airlines not cared about the customers, if they say so? what are the other guys doing? >> i don't really know. i can tell you, i spent a big part of my career in the traditional airline industry. i spent time thinking how i charge you guys more money and give you raisins. and, but, the reality is, is, you know, people get caught up in what's important to the them, go and fly into the right number of cities. they're having a route network that looks nice. they think it's strategy we can serve from here to there. the flight has to leave at 7:00 a.m. that's exactly when customers have to go. we flew that out of the window. let run high utilization. let fly where people want to go at the lowest price possible. we bill the airline to do that. it works well. the reality is 1% of the customers out there will pay really high fares for a great physical product. everybody else wants to save money. >> when it's for me personally.
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i go with my kids, it's like, no, how can this happen? let's just get from a to b safely. >> that's exactly what spirit does. so we take the different approach that most of the industry which says there is a big, high dollar corporate traveler out there that the rest of the industry is chasing. we'll let them chase it. >> right. that's what they do. you make money for your shareholders. you get people from a to b safely. >> safely. >> you see why i like this airline, they're making money, they're saving. the ceo of spirit. what a winner this has been. "mad money" is back after the break. coming up, armed and ready? don't miss cramer's preview.
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right now we got a high quality problem. this relentless bull market has run up so far so fast that it's really not hard to feel like a chump if you are paying up for most of the stocks at these levels. i go through the charts, this weekend, wow. other than gold stocks, if you missed this move, perhaps you gave too much credence to the sell system. those off want to put more capital in the stock market, i know you got your dilemma.
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on the one hand, you worry you may be coming so late to the party, maybe it doesn't make sense to show up at all. on the other hand, there is a fact that it has been a major mistake every single step in this market. a lot of people are convinced by the idealogues when they feel they shouldn't get to this market. the question is, how do you thread this needle? how do you vaccinate yourself against the chump factor? let me give you one word that will do it. that word is catalyst. yeah, you got to find stocks with a powerful catalyst. stocks where you know there will be important needle moving. that news is likely to be good. that could propel a stock higher than it is so far. so i want you to consider the pharma and biotech names that have been roaring all year. roughly two weeks from now, we will see a host of positive catalyst for some of these companies at the big annual american society of clinical oncology, the asco meeting in chicago. that runs from may 31st through
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june 4th. we have always talked about this conference for years on "mad money." this conference is where the drug companies involved in the fight against cancer can strut their stuff and present new data on the most promising cancer killing drugs they're working on. look, we talk about the meeting every year on "mad money" because it can give the drug stocks with the most impressive data a real boost. all right. so i can't see the future. i'm not for the older demographic, carnac the magnificent. so we don't know exactly what is going to happen. however, the abstract of the research presented were released last week. we poured over them. they gave us a decent sense of what's coming. we went over all the major ones. tonight i want to tell you what to look out for two weeks from now, and which stocks had the best chance of rallying on the news, which ones have the catalysts. before i start, though, let me make it clear, i'm not trying to give you a list of the best
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trades. that is a sucker's game now. i want to work investments. many stocks with a shelf life a lot longer than two weeks between today and the oncology conference. i know that's what the majority of you home gamers are looking for. it's been a long time since we decided, hey, here's the stock, boom, boom, boom. we don't do that anymore. people ought to recognize that. the first way to play the asco meeting, going back to the well. gilead. i recommended this in september based on gilead's hiv franchise along with that hepatitis c drug they have in the pipeline. since then, 87% gig. i still like that story very much. but the company has also been making a less publicized push into the cancer drug space, which is what we hear about at the conference, the stock didn't run today. i was surprised given what we are now hearing. gilead has a stock, if you forgive me, a lot you have to buy a vowel for. they're unbelievable. they have a drug adelucib.
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it's for advanced chronic lymphocytic leukemia, also non-hodgkin's lymphoma. it belongs to therapies called pi3k inhibitors. they work by blocking a specific protein, which is essentially the growth of the bad cells. a bunch of other companies target the protein. last week, gilead had incredibly positive early data. now they're pushing for accelerated approval from the fda. overall market for these drugs, let's call it $10 billion. we don't know how large gilead's piece will be. i think we'll get a lot more clarity once they present at the asco conference. i think this can be a potential needle-more. overall, it will have seven different presentations. they are bound to score with one of them. next up, there will be a lot of focus on cancer immunotherapy. these are treatments that turbo charge your immune system's
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ability to fight cancer. this category could be worth more than $10 billion in melanoma, lung cancer and kidney cancer alone. the way to play it, it's kind of a shocker. it's bristol-myers. this stock went up 34% since the beginning of the year. it pulled back last week in a reaction to the oncology meeting abstracts. it found some 46 cents today. bristol myers is a big diversified company. they are starting to feel like a young biotech. their cancer franchise has the potential to be large enough to move the needle. the company has several multi-billion dollar prospects, including a melanoma drug on the market selling well. leading cancer immunotherapy drug play is nevolumob. that's in phase 3 trials, for non-small cell cancer and renal cancer. consensus on wall street is this could be a $1.8 billion drug. data we saw last week was extremely positive. if it gets approved for multiple
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indications, this could be worth 5-$6 billion in peak sales. we should get data on the drug at the asco conference with more catalysts coming for the second half of the year. bristol-myers gets 3.2%. i like it on a pullback. they sold it for my charitable trust, waiting for a pullback. haven't gotten it. 11 days from now, you will hear the news. if you want something that hasn't run as much. you know i'm a fan of merck. my charitable trust went into merck, which has been a sad sack lately. now, thanks to its massive late stage pipeline, it may not be that sad sack. it acted hideously today. they are presenting their own cancer treatment for melanoma. their drug is still in early stage trials. last but not least, you are going to hear about a whole other class of anti-cancer drugs known as parp inhibitors. how do these guys work? let me get a quick biology lesson. whenever your body creates new
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cells the old cells get copied. you get errors and breaks in the enzymes. the prp fixes the breaks. the new cells will be much more likely to die. cancer cells reproduce much faster than healthy cells. if you take away the enzyme that repairs the dna, those cancer cells end up dying rapidly. there are two companies i like. really speculative, it's tesaro. it's a biopharma play i recommended $15 in november. it's now at $35 bucks. you know what, we get some wrong, we get some right. they help cancer patients deal with chemotherapy, induce nausea. the company is working on a parp inhibitor for ovarian and breast cancer. this drug is currently going into phase 3 development. this company is worth $1.5
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billion. tesaro came out last week. i think it is a trick play, i advise on a pullback, it's gone up $4 bucks in the past week. finally there is biomarin. we like it for the orphan drugs. we want to hear more about it at the conference. asco, the american society of clinical oncology meeting starts on may 31stt. we will follow it closely. i like gilead, bristol-myers. merck and biomarin going into the conference. i would buy tesaro but only on a pullback. remember, it's up huge when we first recommended. it is incredibly speculative. ron in south carolina. >> boo-yah from south carolina. a long-term investment on my land. >> i don't like mylan. why? because it's a commodity play. i know they were involved,
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apparently with activists. that's another one of these stocks. that's watson. i don't like these non proprietary. i think their margins are low. they have been winners, though. they have been winners. i have been wrong. i think it's run too much. let's go to joe in ohio. joe. >> jim, how are you doing? >> real good, how about you? a nice weekend. what's going on? >> hey, i want to first thank you for all your hard work. jim, my stock is exact science. they did not do as well as was hoped for in the dna test. so jim, how do you see this working out? >> you know, i talked about the tesaro. the other side was exas. they went down a lot. it came right back as we said. i think the articles were not as bad and the shorts pressed their case. you know what, we're back to 10. let's take it off the table or start all over again. it's all about the catalyst, baby. you can find key info in conferences. asco is a powerful, powerful conference. it starts may 31st. it's gilead, it's bristol-myers.
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it's merck, it's bud, which is really down. it's biomarin and a pullback, exact science. let's say with the catalyst. stay with cramer. ♪ [ male announcer ] a car that can actually see like a human using stereoscopic cameras ♪ and even stop itself if it has to. ♪ the technology may be hard to imagine... but why you would want it is not. the 2014 e-class, see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. [ agent smith ] i've found software that intrigues me.
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it is time! it is time for the lightning round. it's where we tell you whether to buy, buy, buy, or sell, sell, sell. when you hear this sound the lightning round is over. are you ready, skeedaddy? i want to start with steve in connecticut. steve! >> caller: boo-yah, jim. asbury automotive group. it hit 43 last week. it beat the last six straight quarters but still has a peg of .6. is it a cream puff? >> i got to tell you, feel the same about auto zone. this group has been undervalued. it's driving me nuts. let's go to umesh.
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>> i like symbol mpg. >> umesh, there is a lot of people saying i don't like people in wisconsin. it has to do with an altercation with a green bay fan at the linc. i tell you, look, it happened a while ago. people should get past it, right. the guy had it coming. let me answer the question. i think that, oh, the question is mgic. i like radian and i like genworth. i do like wisconsin people. that one guy got out of control. okay? someone had to teach him a lesson. that's all it was. how about greg in new york. >> caller: bbbb-boo-yah, jim. one stock i never heard you talk about is penn national gaming. >> my bad. that's a racino stock. i like those. that stock goes higher. i need to go to dylan in delaware.
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>> caller: hey, what's going on, jim, big villanova university boo-yah. >> wildcat boo-yah. what a great time. i'm ready for my next college tour. it's up to regina. go ahead. >> caller: my question is carmax, two things, it is getting great from the standpoint. they are optimistic in terms of earnings. >> join that guy who downgraded, william blair. here's the skinny with this stock. it's still an inexpensive stock. i want to own it. dave in california. dave! >> caller: hi, jim, boo-yah from california. jim, i wanted to thank you again for all the educational work you did. you had a great segment on mlps last week. >> yes. >> caller: i know they're not right for retirement investors like myself, but i have discovered there was a small family of etfss and etns that focus on the index. >> i don't know the fee structure with that one. that worried me. i do recommend lynnco, allen ceo is the one you don't have to
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have all the crazy forms for. that's the better one i know of. let's go to ed in ohio. ed! >> caller: oh, hi, jim. i want to talk about dominion resources. >> all right. let's do some talking. dominion is good. i have been excited about dominion because of the co-point. i have to tell you there will not be i believe an export facility for natural gas built and finished in this country in this decade. lmg is the way to play that. dominion is the way to play the utility business. i like the way it's run. that, ladies and gentlemen, is the conclusion of the lightning round! ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first.
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♪ in other words [ male announcer ] the classic is back. ♪ i love [ male announcer ] the all-new chevrolet impala. chevrolet. find new roads. ♪ you [ musick ] i knew there were a lot of tech jobs available out there. i knew devry university would give me the skills that i needed to make one of those tech jobs mine. we teach cutting-edge engineering technology, computer information systems, networking and communications management -- the things that our students need to know in the world today.
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our country needs more college grads to help fill all the open technology jobs. to help meet that need, here at devry university, we're offering $4 million dollars in tech scholarships for qualified new students. learn more at devry.edu. in an environment like this where yield is really hard to find, don't forget about the real estate investment trusts. take healthcare trust of
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america, hta. real estate investment trust is one of the largest owners of medical office buildings in the united states with a 4.4% yield, much better than you can get from the treasury, since the consumer goods we talked about, those have run so much their yields have shrunk. they own medical real estate adjacent to major hospitals. the baby boomer generation starts to reach the age where, let's say we need a lot more medical care. plus obama care kicks in next year. affordable care act. that means more people with insurance, something that creates demand for office space all over the country. agh reported two weeks ago. the funds key metric came in at 16 cents, a penny above where the analysts were expecting. they declined in 1989, however the management sees the occupancy rates rising to 94% over the next 18 months. i think we should believe them
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considering agh has given you a 20% return in november. let's talk to the healthcare trust of america, mr. peters, welcome back to "mad money." have a seat. >> thank you. thank you for having me, jim. >> let's go over that. you are very confident things are going to 94. what do you see that you see this occupancy rate going higher? >> well, as you mentioned, affordable care act starts in 2014. we, last time i was here, talked about seeing more activity in leasing. we continue to see that. with the 30-40 million more insured that are coming in. >> right. >> healthcare system is looking for the most effective place to put their outpatient needs. we're seeing additional larger users, tenant users. we also are starting to see employment. you know, the healthcare sector is supposed to grow greater than 70%. >> right. >> greater than the average employment over the next ten years. so we've seen healthcare employers, educators, start using space.
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we've seen space demands now in the 10, 15, 20,000 square feet space requirements. we haven't seen that the last two years. >> one of the things that intrigued me was that in your medical office building supply and demand page, page 7, you say current rental rates are still below those of 2008. they haven't come back yet? >> no, they haven't. we had a same store growth this quarter, came off a same store growth in the 4th quarter. most of that came from two things. one, our contractual rent bumps 2-3%. second, we've internalized our asset management. 87% is in-house right now. the third is that rents are constrained. we saw 1-2% increases in renewal rates this last quarter. but as things recover, as the affordable care act gets implemented, we think we could see 2, 3, 4% of renewal rates which would, again, increase our growth going forward over the next two, three, four years. >> how could it happen you have medical office development
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declining by 70% and the rents haven't already started going higher? >> you know, the affordable care act went through a process. what we heard was the physician was good. the sole practitioner was going to go away. all the health systems were going to hire the physicians. what we've seen is we've seen the physician groups get bigger. better cost efficiencies. instead of 10 doctors, they have 20 or 30. we seen them plan on the preventative medicine they want to implement. we saw them start to use balance sheets. so, this is just starting, and of course, there wasn't funds in order to develop. developers have had big difficulty the last three/four years. >> that's a part of the commercial. you would think the commercial construction business would be building. they obviously can't get loans or there isn't enough demand? >> the demand is there. what is happening is the developers were having trouble getting loans. they were not being able to
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build a spec medical office. >> that's what it is. >> you need the healthcare system to take a significant portion of the space. you need a physician practice with good credit to come in and take a large portion of space. we are starting to see that, but we've still got great opportunity on campus, core critical real estate, where we think the rental rates will move up. we think that occupancy will move in 93-94%. >> you know we've been big backers of healthcare trusts. j.p. morgan has a neutral one. they're saying there is a big lock-up operation in june and 2013 50% of the stock. shouldn't people wait for that opportunity in june? >> well, we unlock june 6th. we have been fortunate. first quarter, we were able to put an atm in place at the money offering. we raised $106 million. we expanded our institutional ownership. when i came on in november, we had two research analysts covering. we have eight now. >> yeah. that's really important sponsorship. >> it's an opportunity when
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the june 6th unlock comes, for people, if there is an opportunity, to get invested in our stock. we are looking forward to additional liquidity, more opportunity for people to get invested. this is a core critical asset class. >> i totally agree with you. that's why we have backers. i think the fact that that increase is coming there is a possibility. this is my own speaking, higher distribution down the road. that's what we care about on "mad money." >> thank you for having me. >> that's the ceo trust, hta, a big winner. look, expiration is coming up. this one has been one of the best in the group. so you ought to do some work on it. "mad money" is back after the break.
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kids in high school play stock games these days. they are enormous all over the country. knowledge base is quite good. i heard the following comment from parents. i wish i had listened to my kids and bought tesla. when i asked why, the parents said because they know cars, they care about the environment. most important, because it's going up higher. i know it's certainly working, just like my old stock, go to 90, go to 100. stocks that go to 100 to the 110 playbook. it's the logic defining the strength in boeing. when it comes to tesla, let's say the kids have something going.
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my blog has talked about his love of electric cars, how incredibly pervasive they are in silicon valley. analysts in new york city, they don't appreciate the driveway effect. he expresses his own love for the power and silence in tesla. he tried all of the electrics and says tesla is the best. the performance, the car care, the excitement, they're all there. it's hard not to sense the popularity is growing. hey, listen, we had our own electrician in the charging stations where i'm the part owner in summit. because we had requests from patrons to do so. hey, it cost us a couple hundred smackers. we paid back in the short time when the customers will demand it. as much as i appreciate the cars, i am in no way opining. by the way, tesla got the financial backing of goldman sachs, they are flying high. pros are being outgunned by the
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amateurs and musk is trying to outbuy his enemies. they made it too small for the short sellers to bring the short in. musk brilliantly said he didn't need the money on the last conference call, it spiked where it was just plain worth it to do the secondary, anyway, in order to raise money to pay back the government loan, tesla. the fact that they didn't applaud this move shows how successfully they loathe this stock. in my view, though, the trajectory of tesla is a referendum on the fact that share count is too small for the stock to be effectively shorted. not a referendum on the cars, which gives them 500,000 per cars, brian sullivan said of course that pales next to the comparison. nevertheless, i figure the shorts can battle tesla on the merits and still lose because of the tightness of supply, which is why i refuse to say whether i like it or not. the next generation likes tesla,
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the car. that generation is playing a stock game now and will soon be buying cars later and playing the stock game for real. maybe that's all tesla's long-term holders need to know. stick with cramer. with the new staples rewards program
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