Jim Cramer, Registered Dem, Defends Bill Frist’s HCA Trades
Somewhat old news: Senate Majority Leader Bill Frist is under investigation for his trades in HCA stock.
An interesting twist: Financial commentator Jim Cramer, first on his nationally syndicated “Real Money” radio show Monday, and then in his Real Money Radio Recap, says that he believes that Frist didn’t have inside information, as his detractors allege, he was just smart (bolds are mine):
Cramer said Frist, whose sales of HCA are the subject of a probe by the Securities and Exchange Commission, likely did not trade on information received from management prior to his selling of the stock because if he had, said Cramer, he likely would have been buying. HCA management and Wall Street were overwhelmingly positive at the time of Frist’s stock sales, said Cramer. Yet Frist sold anyway, which proved to be smart.
There are lessons to be learned from Frist, said Cramer. First, be skeptical when management and/or Wall Street are enthusiastically positive, said Cramer. Second, don’t be a pig — take profits when a stock is up huge. Third, understand the importance of sector trends. Despite HCA management’s and Wall Street’s bullishness, hospital trends were weakening at the time of Frist’s sales, said Cramer.
So, give Frist the benefit of the doubt, he said. Frist was smart to sell, or at worst, lucky. But, he’s most likely not guilty of insider trading because if he had listened to management, he would have been buying, not selling.
What is not mentioned in the web link, but was mentioned by Cramer in his opening radio segment, is that he (Cramer) is a registered Democrat.
Cramer’s argument is convincing. I suppose there will be those who believe that Frist may still have had hush-hush contacts with management where he learned that the stock was in trouble despite all the public happy talk. But given Frist’s track record, I doubt that very much.
It’s also worth mentioning that Frist had been getting required approvals and opinions from teh Senate Ethics staff, the Finance Committeee, and who know who else for several months before ordering the sale. At the time he started the process, quartlerly results wouldn’t have been know because that quarter hadn’t even started.
Comment by Charlie (Colorado) — October 18, 2005 @ 3:43 pm
Thanks for that info.
The only way the MSM can make Frist look bad is to not report what you just noted. So….they don’t.
Comment by TBlumer — October 18, 2005 @ 9:49 pm
I saw Cramer make the same argument on his TV show. I have a feeling he is a half hearted Democrat. He stays relatively objective.
Comment by LargeBill — October 18, 2005 @ 10:55 pm