Jim Cramer says fund managers are looking for stocks that have been beaten down big, but still represent value.
How do you explain Thursday’s rotating bull market? Just ask the hedge funds, Jim Cramer told his Mad Money viewers Thursday. You don’t have to overthink it, Cramer continued, the hedge funds are the ones in charge.
To understand the mindset of the market, you must first understand the mindset of fund managers. Funds are always on the hunt for new, fresh ideas, ones the millions of other funds haven’t already thought of. They can’t afford to simply keep investing in energy and the financials, they need to take a risk on something new.
That means fund managers are looking for stocks that have been beaten down bug, but still represent value. Stocks like Intel (INTC) – Get Intel Corporation Report, that semiconductor dinosaur that’s down big from its highs, now feels new and cheap and fresh, which is why fund managers were willing to pay up, sending shares up 6.9% by the close.
Over on Action Alerts PLUS, the team is ringing the register on Nucor (NUE) – Get Nucor Corporation Report and Union Pacific UNP, and putting a little of that cash into a certain tech giant. Get in on the conversation and hear more about the moves in the Action Alerts PLUS investment club.
And since Intel is a major component of every semiconductor ETF, that sent shares of Marvell (MRVL) – Get Marvell Technology, Inc. Report and the other semis up as well. The short sellers were also fleeing Nvidia (NVDA) – Get NVIDIA Corporation Report, which rose about 9.8% Thursday.
What else is feeling fresh? Fund managers seemingly like DocuSign (DOCU) – Get DocuSign, Inc. Report as our economy reopens, and Estee Lauder (EL) – Get Estee Lauder Companies Inc. Class A Report, which is still expensive at 36 times earnings, but always delivers for shareholders.
There’s no magic pattern or formula to these moves, Cramer concluded, its just whatever ideas money managers get in their heads.
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