Cramer's KRE vs KRE's components
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Created by Roy in Oceanside
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Date updated:09-01-2007

Jim Cramer recommended the regional bank ETF "KRE" during the week of 8/20/07. The portfolio included KRE plus the top 25 stocks within KRE. The performance tracker at right is on. As time passes we can check the perfromance of KRE against the performance of the component banks within KRE. I waited 5 days after Jim's recommendation before entering this portfolio. For reference we are in the middle of the August 2007 Subprime Slime Meltdown.
This is a summary of what Crmaer said from Street.com:
Calling Wall Street "a gigantic fashion show," Cramer explained that stocks regularly "come in and out of style." One area he foresees becoming "fashionable" is regional banks. These banks make money off the spread between "the short rates," the cash borrowed from the everyday customers -- the rate that Cramer expects to get cut -- and "the long rates," which is what they lend to home-buyers.

Cramer thinks the Fed's rate cut will make the difference. These banks will "go from making no money" beyond ATM fees to "making a huge amount of money" on "what they take from you and loan out to others."

Cramer's pick of the bunch was KBW Regional Banking ETF (KRE) . KBW has more than 50 holdings, and its five-year earnings growth is more than 9.4%.

It also carries a "weighted average market cap" of more than $2 billion with no mortgage problems foreseen.

While Cramer also discussed National City (NCC) and Comerica (CMA) , he said to look at KBW as the safe pick. As "ETF" implies an exchange-traded mutual fund, investors will "spread the risk." They also position themselves to benefit should there be any takeovers of regional banks.

"If you can't get a good price, wait until it settles down," cautioned Cramer about a buy-in to KBW. We're buying a sector here, not best of breed," he said, adding that this may be the "best way to play the upcoming cycle of the Fed."

symbol name last price % change open
  • +
  • KRE
    Kbw Regional Bank
  • $32.10
  • +0.25%
  • $31.60

This is the regional bank ETF that Jim Cramer recommended on 8/20/07. See explaination of this Cramer pick above at right. See the price performance tracker at right for performance of this ETF vs the performance of the individual banks within the ETF.

People owning KRE also tend to own: ARAYCHCG.OBCOGOCVYDUGFXEGASS

TheStreet.com Rating: No Rating What is this?

  • +
  • EWBC
    East West Bancorp
  • $12.47
  • +1.05%
  • $12.22

No Analysis added

People owning EWBC also tend to own: AAADMCCRTCVXFMDMRONWS

TheStreet.com Rating: C- What is this?

  • +
  • CBSH
    Commerce Bcshs
  • $45.00
  • -0.44%
  • $45.31

No Analysis added

People owning CBSH also tend to own: BACBPCLEDFITBFREGE

TheStreet.com Rating: B- What is this?

  • +
  • SNV
    Synovus Finl Cp
  • $9.20
  • +0.55%
  • $9.11

No Analysis added

People owning SNV also tend to own: IDIXIOMITSSCNSLITTJSDANTRS

TheStreet.com Rating: C+ What is this?

  • +
  • CYN
    City Natl Cp
  • $49.49
  • +0.45%
  • $48.91

No Analysis added

People owning CYN also tend to own: AWBRCMCCKCHECTXFDOFDRY

TheStreet.com Rating: C What is this?

  • +
  • BSX
    Boston Scientific
  • $12.56
  • -2.18%
  • $12.78

No Analysis added

People owning BSX also tend to own: AFFXCAWCHKEMYLVLOOSIPOSTK

TheStreet.com Rating: D+ What is this?

  • +
  • CNB
    Colonial Bancgrou
  • $6.32
  • -1.40%
  • $6.16

No Analysis added

People owning CNB also tend to own: AUYBLSBVNCSCODUKGEGM

TheStreet.com Rating: C What is this?

  • +
  • SBNY
    Signature Bank
  • $29.57
  • -2.57%
  • $29.96

No Analysis added

People owning SBNY also tend to own: ASBCBOHBPFHBSXCATYCBSHCFR

TheStreet.com Rating: C What is this?

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Start Price

Return Value

Start Date

KRE 45.13 -28.87% Aug 28th
EWBC 36.73 -66.05% Aug 28th
CBSH 46.74 -3.72% Aug 28th
SNV 27.91 -67.04% Aug 28th
CYN 71.59 -30.87% Aug 28th
BSX 12.65 -0.71% Aug 28th
CNB 21.48 -70.58% Aug 28th
SBNY 33.68 -12.20% Aug 28th
WBS 42.87 -50.27% Aug 28th
FCBP 54.69 ------ Aug 28th
FMBI 34.34 -34.83% Aug 28th
TCB 25.05 -37.13% Aug 28th
VLY 22.70 -11.85% Aug 28th
BOH 52.44 +0.84% Aug 28th
UCBH 17.19 -65.97% Aug 28th
CATY 33.10 -41.51% Aug 28th
HCBK 14.09 +30.87% Aug 28th
WL 40.36 -41.85% Aug 28th
TRMK 28.25 -32.07% Aug 28th
CFR 51.67 +7.76% Aug 28th
ASBC 28.10 -37.72% Aug 28th
PBKS 31.29 -75.39% Aug 28th
BPFH 27.58 -67.59% Aug 28th
PBCT 17.44 +2.75% Aug 28th
UB 59.73 +23.36% Aug 28th
SPY 146.95 -12.36% Aug 28th

Average return:

-28.92%

Success rate:

20%

Tracking Started: 08-28-2007

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