Cramer Is Wrong: Why NII Holdings Is a Buy

While I have enormous respect for Jim Cramer’s marketing and promotional skills, I often have strong disagreements with his buy and sell advice. I felt his recommendation to sell NII Holdings (NIHD) on his Monday show was not only wrong, but based on faulty reasoning and statistical manipulation of the facts and numbers. To be fair, I hold a generally longer term investing perspective than Cramer that will naturally put us at odds regarding stock buy or sell recommendations. Additionally, I focus more on fundamental values where investors like Cramer tend to be more price action oriented. Consequently, I believe both NII Holdings and American Movil, S.A.B. de C.V. (AMX) are strong long-term buys based on fundamentals.

The adage that statistics don’t lie, but statisticians are damn liars applies to my objections to selling NIHD. I felt Cramer really played with the numbers in ways that distorted the facts. He didn’t lie, but I felt he exaggerated certain facts and left out other important ones. For example, to state that NIHD is losing customers was way overblown and wrong. Cramer stated that NIHD’s churn rate increased 40% from 1.5% - 2.1%. the actual numbers are 1.8% - 2.1% which is a 20% not 40% increase. Put in a more positive light NIHD had a 97.9% customer retention rate. Considering the state of the economies in their market that’s pretty good.