Patience is key in today’s market

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Comcast Corp. may be paying a lofty price to buy European cable operator Sky PLC, but the market is reacting far too harshly to what could be a very lucrative deal for Comcast, CNBC’s Jim Cramer said Monday.

“The textbook example of Wall Street’s aversion to long-term thinking is really the stock of Comcast, the parent company of this network, down 6 percent today,” the “Mad Money” host said. “Because many investors despise long-term investments, the stock had its worst day in nearly three years.”

While he thought the narrative around Comcast’s interest in buying Sky had been muddied by unfounded worries around cord-cutting, Cramer could understand why investors were concerned.

In Comcast’s last two major acquisitions — buying AT&T Broadband in 2001 and buying NBCUniversal, parent to CNBC, in 2009 — investors were equally shaky, Cramer said. After each deal, shares of Comcast tanked roughly 7 percent because “the deals were viewed as too expensive and too risky,” he said.

But since the AT&T deal, Comcast’s stock has not only recovered, but built on its gains, giving investors a total return of 392 percent versus the S&P 500’s 349 percent gain. Since the NBCUniversal deal, Comcast is up 425 percent versus the S&P index’s 220 percent.

“On Wall Street, the two most dreaded words in the English language are ‘long’ and ‘term,'” Cramer joked. “When you start talking about long-term earnings, the hedge fund guys will smile, they’ll nod and then they’ll rush to sell your stock.”

In the case of Comcast, however, short-term-focused investors have long been proven wrong, the “Mad Money” host said.

“I think these bears have got it backwards: long-term thinking is essential; short-term thinking is dead-end,” Cramer said.

For more of Cramer’s analysis on the Comcast-Sky deal, click here.



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