Stock Smackdown: Cramer vs. CAPS

There's no denying that Mad Money host Jim Cramer is entertaining, popular, and passionate. On many occasions, he's even right. So he's smart, funny, and the closest thing to a stock market rock star -- but is he smarter than you?

Cramming for Cramer
The Fool's free investing community, Motley Fool CAPS, aggregates the opinions of more than 140,000 members to assign ratings for each stock's likelihood of outperforming or underperforming the market.

Below, we look at some top stocks that Cramer picked and panned during last week's "lightning rounds," and compare them with how the CAPS community sees their future.

Cramer says
Cramer says the federal government's ability to start selling its significant ownership stake in Citigroup could put pressure on shares. But with the stock selling at a significant discount to its book value, he thinks the financial giant has upside potential even if he'd like to see better prices before wading in with both feet:

September 10th is the day that the Federal government can start selling Citi... are they going to play the market and let their gains ride... who the heck knows... it is the Federal government... do you think they are going to tell little old me?... But I have to tell you, I think Citi has a $5.60 book value... it is selling at $4.60... the average stock is selling about 95% of book... which gives you .60 cents more than you can make at least in Citigroup... yes I want to buy Citi... but I am not giving it a buy, buy, buy... that is deserved for if it ever goes down to $4.25 again.

CAPS says
We're quibbling about pennies here, says CAPS member MLIAOM09, even if there is risk. When we look back in a few years, we're going to see that we missed an excellent opportunity to scoop up Citigroup at better than fire-sale prices:

I'm betting that Citi will be around in five plus years and if I'm right it will be worth more I mean way more then today. Small bet though. Risky stock. Speculation its survival is not a great way of investing

This Fool says
One year after Lehman Brothers' collapse, we're still none the wiser. Bankers learned that if you grow big enough and assume excess amounts of risk, the government will force taxpayers to bail you out. They learned that even getting a bailout shouldn't stand in the way of billion-dollar bonus pools. And the dangers of leverage have been completely lost on them.

According to Reuters, the 18 primary dealers required to bid at Fed auctions increased their leverage by 75% since May, using the proceeds to once again finance riskier home loans, corporate-backed securities, and the agency debt and mortgage bonds guaranteed by Fannie Mae, Freddie Mac, and lesser-known sibling Ginnie Mae (Government National Mortgage Association, GNMA). That latter taxpayer-owned entity looks like it may be the next domino tumbling over.

Last week it announced that it had issued a record $43 billion in mortgage-backed securities in June and it is expected to top $1 trillion in exposure later this year. GNMA bundles and resells -- with government backing -- mortgages insured by the Federal Housing Administration, but according to HUD, the FHA has a default rate that's twice what's considered safe for lenders, while having reserves that are half as much as it had in 2007. That means its leverage ratio is 33-to-1, or about what Bear Stearns had before it collapsed.

HUD says investors and taxpayers can expect to see a Ginnie Mae bailout on the horizon. With financial instability rampant on Wall Street, can we expect Citigroup's stability to be anything but wobbly at best? I don't think so, and even at $4 a share it seems like a crapshoot.

Your say
What do you think? Is Cramer right or off his rocker? No need to hedge your thoughts on CAPS. Go sound off right now on whether you can take Cramer to the bank on Citigroup.

Motley Fool CAPS is also a great place to start your own research on these stocks. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Best of all, it's free.