Jim Cramer Predicts BP plc (ADR)(NYSE:BP) Bankruptcy
During his “Eureka Moment” segment, Jim Cramer told viewers of his “Mad Money” TV show that BP plc (ADR)(NYSE:BP) is not too large to fail. In fact, he thinks its a real possibility that the Gulf disaster could could easily swallow up the entire company. “Because of the potential for a near infinite number of claims from the Gulf of Mexico oil spill,’ Cramer said, “bankruptcy is very much on the table for BP.”
Cramer said the BP oil disaster should not be compared to the Exxon Valdez spill, but rather to the asbestos industry, which has completely wiped out due to the large number of claims it was hit with.”It”s magical thinking to believe the company’s cash flow of around $7 billion a quarter is enough to get them through the disaster,” he said. Cramer said this would be especially true if a big storm blows through the Gulf of Mexico.
“if we get indictments,” he said, “the claims will overwhelm the company, and it will be in BP’s best interest to file bankruptcy in order to manage the process.”
Cramer explained that lots of people though the asbestos industry would be safe despite the endless denials. “But one by one, the manufacturers, the distributors, the installers, and eventually everyone who ever came in contact with the stuff, even tangentially, disappeared,” he said.
“Its not on the top of anyone’s mind that this could happen because BP is a huge company with lots of resources,” Cramer said. “But so were all of the companies that made asbestos.”
Cramer told viewers BP’s stock is uninvestable and dangerous, even at its current depressed prices. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
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is this the same guy who failed to spot the financial crisis? how come he’s still in work?
Until I read the congressional letter to Tony Hayward that was sent to him prior to his hearing, I thought that BP could weather the storm, that their stock would eventualy recover. After I have read this letter I am very concerned about BPs future and would not like to own any of their stock. If negligence can be proven for P executives, it would open the door to litigation which certainly could bankrupt BP. I would recommend to anybody who is considering making a windfall out of the depressed BP stock price to get hold of this letter and to read it carefully, perhaps seeking some explanantions from a friend in the oil industry. You can get hold of this letter here:
http://thehill.com/blogs/congress-blog/energy-a-environment/103255-letter-to-tony-hayward-chief-executive-officer-of-bp-rep-henry-waxman-and-rep-bart-stupak
Asbestos could be replaced with other materials. We’re hooked on oil, and likely to be for a long time. Does the comparison hold up?
Jim Cramer is an idiot. He is a trader and runs a firm that is more interested in FINANCIAL PORNOGRAPHY than investing for long term. BP will pay for this for years, but they will cap the well and life will move on. The man in charge of drilling the relief wells is 20 for 20 or 100 success ratio. Look at Jim Cramer success ratio, i bet less the 50/50. Odds are better at horse shoes for Jim Cramer. Look at the dividend history and stock history for EXXON after the EXXON Valdez in 1989.
Asbestos is a Hazardous Material incompatable with human proximity, in the home or worplace. Oil,fuel, plastics are all petroleum based, safe, everyday products valued in our lives. BP has potential liabilities that may force them to seek bankruptcy protection. Those liabilities are due to their negligence and greed not the fault of an inherently unhealthy product such as asbestos. Thus, petroleum will continue as a viable product while asbestos will not. BP may have problems but the analogy is faulty.
Sell BP?… Only means one thing… Buy Buy Buy!
Not every asbestos company disappeared. One was acquired by Bershire Hathaway; Johns Manville. A little history regarding Johns Manville:
1982: Asbestos litigation prompts the company to file for protection under Chapter 11.
1988: Manville emerges from Chapter 11.
1996: The company changes its name to Schuller Co.
1997: The firm reverts back to Johns Manville Corporation (JM)
2001: Berkshire Hathaway Inc. acquires JM.
The $100 Billion Pelican. Each new attention seeking analyst or politician discovers that there is always a higher number to toss out. I love Cramer’s “near infinite’” which by my estimation makes him a near idiot.
I haven’t seen anything to substantiate even $1 Billion in damages yet (as distinguished from cleanup costs). As for shareholder lawsuits, um, this will impact the value of the company, how?
i wish the queen of england would step up! tell
these stupid polticians to do do their jobs. HOW EMBARRISING IS IT – WHEN IRAN PROBABLY COULD HAVE FIXED THIS PROBLEM BY NOW! DAM. oh and by the way i may never get get my $20k back. at 32 a share, rico is alive and well. louisiana doesnt deserve one cent,
screw the 5th court. tell that dick to move to venuzeula.
put thye final nail in the coffin, tell america to get a clue. one embarrassed american!
If somebody wont get off their pathetic sorry ass excuse for a phd education, i will.
who cares if bp used to support millions of people through there dividend. eeeegaaaads. hey try to steal bp and give it to ohhhh china umm russia ummh mexico um screw it up again! the american way
Bankruptcy is near. even though bp can survive, they still have to deal with alot of claims. these claims might last for many years. so dont expect they will make money for many years.
Keldul, “a lot” is two words. Bankruptcy is not near just because you have a sense of foreboding. BP will pay every legitimate claim and resume their dividend next year.
Jim is RIGHT for a change. I don’t know about bankruptcy, but, BP will see it’s stock prices in teens before it sees tha 40′s.
Until the oil is flowing, the price of BP will be under severe pressure. I maintain my short stance on BP.
Ha ha! Cramer and just about everyone else was wrong – again!! I bought at $26! “See the teens before tha 40s” – funny!!!
Haha. Well done Matthew. I bought it at 28 and have made a killing! Keep giving me advice Cramer, and I’ll continue to turn the opposite way. Jim Cramer is a bum..