Cramer tonight wanted to review a couple stocks that the Short Sellers have wrong; he calls it SHORT BUSTING. This is where there are too many short sellers in the wrong stock under the wrong logic. Cramer said when he used to short he was worried the stock he shorted was actually of value. When the short sellers have to cover in a short squeeze it can really make it move. He looks at the average volume per day and the insider buying.
Greenbrier Companies (GBX), the railroad equipment maker, is Cramer’s second SHORT BUSTING stock. The insiders have started buying; despite large debt, production issues, and an earnings miss he thinks it’s ok. Cramer thinks it is cheaper to ship via rail now than it is via trucking and the rail business has been held back by car shortages. There is 18% of the float short, or almost 4 days to cover. Cramer said that a hedge fund manager he really likes now owns 10% and added $2 million in the quarter to the position. The miss came from non-recurring events last quarter and they have an acquisition closing soon. SAC and T Boone Pickens own decent stakes in the company; now there are too many shorts.
This one went up 5% to $28.75 after Cramer called this one; but its 52-week trading range is $23.56 to $46.63; average daily volume is 362,000.
Jon C. Ogg
January 30, 2007
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