Activists keep a flame under this market

They're inspiring companies to make moves that attract investors.

By Jim Cramer Jan 29, 2013 10:21AM

thestreet logoCEO Digital Vision Getty ImagesThey keep doing things to make the market go higher, "they" meaning activists and active managements that are tired of seeing their stocks flatline.

We have been saying for some time on "Mad Money" and here that Hess (HES) needs to break up and separate that nasty refining business in order to bring out the value of its fantastic exploration-and-production assets.

We know that an activist, Elliott Associates, has been agitating for change, wants to be bigger and said it might want to nominate candidates for the board.

In what looks to be a preemptive move, Hess took the action that should please everyone except those who believe that the whole company should be put up for sale.

Or how about Waste Management (WM). The stock has been a dog, although it has paid you to wait. This morning, Credit Suisse points out that the company should convert to a real estate investment trust, something we have seen with less traditional companies of late, including American Tower (AMT) and Weyerhaeuser (WY). We don't know if Waste Management will go through with it, but the prospects, judging by the increase today, sure are tempting.


Or Sanford Bernstein pointing out today that American International Group's (AIG) management is anxious to narrow the gap between the book value, which is almost twice what the stock is worth, and the current price.


Or Carl Icahn agitating for a big dividend from Transocean (RIG), which does have the capacity to give you one. He takes 5.61% and then urges a $4 dividend, which is something that would attract real buyers.

Or, let's just call it as it is. Salesforce.com (CRM) issues a proxy to put forward a 4-for-1 split, and the retail investor who has been handicapped by the high dollar price of, say Netflix (NFLX) or Amazon (AMZN) or Google (GOOG) or Apple (AAPL), gets excited and does some buying, even as we know that this is a fatuous reason to buy anything.

It is, after all, the same company before and after the split, so there's nothing that moves the needle except the animal spirits that a split attracts.

Companies are doing things to attract investors. Activist investors are doing things to inspire companies. It all makes sense, and it is happening right now.

 

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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 is long AIG and AAPL.

 

 

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