3 short ideas that just aren't playing out

These stocks are widely hated, but you can't deny their performance.

By Jim Cramer May 10, 2013 9:09AM

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The action in Tesla Motors (TSLA), Green Mountain Coffee Roasters (GMCR) and Barnes & Noble (BKS) strikes at the core of the dichotomy in this market. These three stocks represent what I call "intellectual shorts," meaning that the intelligentsia in this market truly despises these stocks.


Take Tesla. Here's an $8 billion company that is going to make 21,000 cars that many of the intelligentsia set thinks are worthless. The party line on Tesla is that Chairman and CEO Elon Musk is a blowhard who is not to be trusted. They don't believe that the company is actually profitable, as Musk claims it is. They don't believe the financing numbers. They don't believe the guarantees.


But in the end, it doesn't matter what the intelligentsia believes, because the public likes the Tesla car, Consumer Reports just gave it its highest rating in years, and unless the Securities and Exchange Commission steps in to challenge the numbers, the short-sellers could remain wrong for some time. That is, if they were ever right.


I am bombarded with notes from people urging me to knock Tesla. I have no idea how to value this stock. It is a cult stock involving a cult car, and Elon Musk says that 25% of the people who take a test drive buy it. If that is true, then the company can sell every car it makes from now until kingdom come as long as the quality is high. So the stock can keep percolating higher.


Arrow Up © Nicholas Monu iStock Exclusive Getty ImagesSpeaking of percolation, if you look at Green Mountain today, you can see what happens when the intelligentsia gets it right, but it doesn't matter one bit. The rap on Green Mountain was that sales are slowing for the Keurig coffee-making unit, and that, plus the competition from the likes of Nespresso, means that Green Mountain could be a terminal short. Of course, there were also whispers that Starbucks (SBUX) was going to take aim at Green Mountain, and nobody can withstand an enemy like Starbucks. Instead, the two companies announced a five-year partnership that put an end to the notion that these two will be warring anytime soon. The deal also includes the possibility that Starbucks will sell Keurig machines, so there goes a principal leg of the negative thesis.


So it's a good short gone wrong.


Finally, what can be said about Barnes & Noble? You have a billion-dollar company that might be getting a billion dollars from Microsoft (MSFT) for a product that's been crushing the company, even as it is regarded as technologically superior to Amazon.com (AMZN). But a newly invigorated Microsoft, which has an investment in the device already, seems to want the whole device, as long as it isn't stuck with the bookstore chain. (Microsoft owns and publishes Top Stocks, an MSN Money site.)


I know Borders was a loser. I know the book business has never been tougher, courtesy Amazon and the Kindle. But is Barnes & Noble worthless?


Hard to believe.

All three of these are crowded shorts, meaning that so many people have a group-think against them that they are being gang-tackled. But all three have been elusive and have broken away from the tackling and now are off to the goal line.


I know many short-sellers are telling me "just you wait" to see what happens to these companies. I come back and say, "Wait for what? It's already happened."


That's the tough thing about being intellectually right and practically wrong. It's never easy to admit you are wrong, especially when you think you are the smartest investor in the valley. But it has been known to occur many times since this bull market began. Still, these extremes are a little frightening to watch, and you know, in the end, that those who are fighting these moves became cannon fodder for the moves themselves, as they have to bring in their shorts, if only to give back what's left of the money they are investing from people who thought that these managers were really smart.


They were. By half.

 Cramer

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.

  


 

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25Comments
May 10, 2013 10:06AM
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Never been a fan shorting a stock, don't have the stomach for it.  Maybe I like the idea of profiting from a companies success and not it's failure.  Many have made money from it though it's just not for me.  Unless you can predict the month the $85 billion stops flowing then not sure how your shorts are going to go.
May 10, 2013 11:16AM
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The Dow is up 85% BEFORE dividends since Obama took office.If you have

brains you`re a hell of a lot better off since the awfull Bush years of 37%

market loses and losing 800,000 monthly jobs.

May 10, 2013 9:42AM
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Well I got sucked in because of one word in the first paragraph..."Intelligentsia"..

Now I don't know if that is really a word, or a play on Spanish 101...??

I'm not going to look it up, and would rather spend my time, making "toast and jelly."

 

Love how we get a multitude of Articles on two or three Stocks/Companies, after they have taken a "rocket ship ride" a day or so earlier...Going up 10,15, or 20%....Kinda late to buy them now.

I wanna know what the" next soft ice cream" is gonna be...??

Not what has already been.

May 10, 2013 9:37AM
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so then in otherwords, one needs to research these (and any) stock further to decide if they want to buy on quality or because of some mass agreement? 
May 10, 2013 10:16AM
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Steve, in an answer to the our solar plight, from the other article; I've consider looking into some panels to find out what they could produce or save in E-useage.

Have about 10 square of lower roof on Southernly exposure, don't know how many panels it could hold because they vary in size...Usable space is about 25'apx. by 50'. With a small room upstairs convenient to locate any converters or electronics..Don't want batteries there, maybe in basement??

I'm really concerned on ROI...Return/Investment because of our age.

Was interested back in the 70s-80s, but never followed through and it was quite expensive.

Got some hippies living about 3-4 miles from here, they have some of this stuff, was going to stop and pick their brains.

Next comment about Wind Power:

more interesting then Tesla and Green Mountain...

 

May 10, 2013 11:54AM
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Guess just gonna put "cruise control" on today..Let Markets do their thing.

I'm gonna wait for "anything or everything to happen"..Hoping it turns into an even day..

 

Me and Lt. Danz have to get busy..

Been a decent week, you all have a nice weekend..

May 10, 2013 11:42AM
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Steve, we have about a 1000' foot field behind our house and barns, it's has timber or woods running along both sides....Always(usually) have a breeze coming off the field...?

Maybe something to do with different temperatures converging out back.

Therefore have been interested in some type of  wind power generation for awhile.

I've seen a few simple installations, that I have been impressed with..But don't know a lot of details about power output or residential usage....Let alone cost recovery..

 

I thought about an installation that would just run lightning and other low amperage equipment.

May 10, 2013 11:28AM
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Never screwed around trying to "short the market or equities" my brother-I/L and I have talked about it.

Because I'm a long and short term investor,just don't want to get anymore involved then what I am..

Maybe too much stress with experimenting to diversely in the Markets.. Who knows..??

May 10, 2013 9:58AM
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Huh? How can ANY "short" pay out when Bernanke infuses new diluted dollars into the markets each month? Shorters are using commonsense against Bernanke-- an apparent closet Heroin addict... because he made a flawed spreadsheet a bible and ignored multiple history lessons and warnings. We are screwed royal now.
May 10, 2013 4:29PM
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Barry, I see your IQ hasn`t gone up.Still name calling and those phony stats

that you`ve been repeating for moths.The fact remains if you had brains, you`ld be

much better off with Obama.I`m getting over $2000 a month in dividends.Don`t

you wish you had brains enough to do that?Just contiue your rants.I`d be bitter

if I had to live in rat infested NY.Thank God I could retre to the SW and try to educate

the right wingers that don`t get it.

May 10, 2013 11:06AM
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Steve....Don't really get any trade or even business mags anymore, Maybe Time and Vet mags(Miss Lilly bought Time from G-kid promotion)....But read articles on Computers or listen to people in bars,clubs and casinos....Like to enjoy my research.

Some of the best tips I ever got were from some 3 paragraph blurb in a newspaper, or some drunk mumbling in a bar...Learned that from some of the best...Investors or business people.

When I first retired, had to use up some freq-flyer promotes...Ordered about 5-6 investment mags for a couple years and WSJ.

 

Not really a geeky type guy, like to putter.... Drink whiskey and like hamburgers.

But in my last career installed and maintained CATV, CableTV systems in their infancy in the 60s.

Was there when(80s) Fiber Optics/Lightwave was put into the field for practical usage installed and maintained cross-country in 2-3 States, when it was born. Also had worked on cross-country MicroWave transmissions and towers.

Installed and maintained Worldnet/Internet services when it came about more at a National level.

About the last thing I did was put in NGLG.....Where 10s of thousands of circuits could run across the World on very small cables.

Almost got inolved in cell and wireless, but decided to retire after 30 years and a few days...

Couldn't turn it down....Like I said, I'm not really a geeky type guy...Like the nuts and bolts tho'.

 

May 10, 2013 5:38PM
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Nice way to close the day and the week...Good guys came out on top once again....Sweet....Will not be any easier next week though, better believe that....Have a great weekend all and go Knicks and Yanks!!!!
May 10, 2013 4:48PM
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Well it was a good day, and a nice week....Markets took care of themselves..

Scumbags and Manipulators lost in the end...

Cruise Control works well sometimes...

"anything and everything can happen"....Sometimes.

May 10, 2013 3:41PM
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Nice to see Alias-Barry-Soetoro finally made an appearance so he could torpedo yet another discussion into a worthless round of offensive and disgusting name calling...

 

Thank God it's Friday...

May 10, 2013 12:32PM
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So no Monica ABS today .....ah well I am off on a 3.5 day weekend ....have a good one fellows !!

Monica if you do show up C U Next Tuesday !
May 10, 2013 12:31PM
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A whole page to say nothing. Harvards standard of education is slipping.

Short selling is crazy .....if you think something is going down buy ETF or Stock puts ....yes there is a time frame involved but you can measure your risk tolerance.

Bobo Numbnutz is on form today.
May 10, 2013 2:42PM
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  NTC,  I agree with you totally. Shorts are in rotation lately, those that thought the market was long in the tooth some time back find themselves under water and cover pushing the market up as does the shorts that came in later and so it will go until the percentage of shorts diminish a bit and/or the shorts fall into stronger hands. This may be starting now as hedge funds short aganist their profits. they could be readding to take some off the table as we move into the summer doldrum season. A 3 to 7% correction could be healthy shot term. But that could get us onto the sept. oct. silly season, then who knows. I tend to use smaller caps etf's and puts for going short as they are less affected by buyers coming from outside our borders and tend to down downdraft harder. Of course, if we have big pullback or a weak $ offshore money could pull out faster then it came in pushing the market down faster than it helped push it up. I think this kinda goes along with your thinking. Good Investing! Be Alert!
May 10, 2013 10:47AM
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Shorts are misunderstood by most investors.  They are like the quiet smart kid in the corner who never says anything.  They keep the hyperbolic longs from wetting all over themselves. They have taken a beating because of the unfundementaled market rises that prove their foundation as worthless as the fundamentals for the longs. I don't think one has to be too talented at present,  but more inclined to be lucky at timing, and to believe that Bernanke says what he means and means what he says.  This will turn and if you are long you had better just hope there are many many hungry shorts who will take their foot off the throat early or they will yank the bottom out of this market faster than you can say "spin it".   As many longs are as giddy as all getout, almost to the point of being drunk with themsleves.  This will change, and when it does we will see "our" day for all the fundamentals piled one on top of another say this market is extremely "imbalanced" when looked at by any investment doctrine.  I am inclined to the short side as that fits my emotional makeup more than being long. And anyone who thinks emotion has nothing to do with market movement is foolish at best . One day this will be exposed and the financial bloodshed will be massive.  The New World Order requires a massive loss of wealth to motivate the masses to support Central Planning and no way better than a total and complete collapse will do just that.  Human Nature has never changed and Human Nature dictates the masses will be misled as they always have been throughout history.  I am not saying today or tomorrow but it is inevitable, and to stay as disciplined to reading the warning signals as possible is the best form of  financial survival. JMHO
May 10, 2013 10:42AM
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We were not able to come back all the way yesterday but it could have been a lot worse....Oh well, as far as today, they are trying to continue doing their thing; its friday and manipulators will try to drop these markets as much as they can...Still early so anything and everything can happen...Oh and its friday, be very cautious...More later.
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