Jim Cramer, the eccentric host of ‘Mad Money’ on CNBC, is one of the most recognizable voices covering finance in the United States. Recognizable, however, does not necessarily equate to reverence.
Although he allegedly achieved an average annual return of 24% while actively managing his fund, Cramer & Co (later renamed to Cramer, Berkowitz & Co.), after retiring, he has achieved a near-miraculous ability to recommend or disavow a stock — only for it to make a sudden, unexpected move in the opposite direction.
This phenomenon is so common that it even led to the creation of an ‘Inverse Cramer’ exchange-traded fund (ETF). Although the fund soon went out of business, trading bots applying this strategy have remained operational — and have seen quite a bit of success.
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However, the Cramer effect isn’t always instantaneous — although it usually is. In some instances, there’s a slight delay at play. Back on December 20, 2024, the former fund manager referred to CVS Health Corporation’s balance sheet as difficult to fathom, and the overall situation surrounding the company as ‘fraught.’
Surprisingly, nothing of note happened in the immediate aftermath. However, roughly two weeks later, CVS stock (NYSE: CVS) has begun to recover. Let’s take a closer look at the numbers.
CVS stock has delivered a 48.80% return since Cramer’s warning
At the time of Cramer’s warning, CVS shares were trading at a price of $44.36. By press time on February 19, the price of CVS stock had risen to $66.01, marking a 47.05% increase since the start of 2025.
Accordingly, the price has increased by 48.80% since Jim Cramer called the overall situation fraught. So, what happened?
First, we have to take a step back. A look at a 1-year chart shows that CVS stock was not having a good year in 2024 — and that a significant move to the downside occurred in early December, before Cramer’s tweet.
On top of struggling performance, in December, then-President-elect Trump publicly criticized pharmacy benefit managers (PBMs), such as CVS’s Caremark, labeling them as middlemen and expressing an intention to eliminate them. This happened to coincide with a bipartisan legislative effort that would have required parent companies to divest from their PBMs.
Then, in January a 4% increase in Medicare Advantage reimbursement rates was proposed — leading to the initial recovery. Finally, on February 12, the company released its Q4 and full-year 2024 earnings report — in which both earnings and revenues came in above analyst estimates.
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