Jim Cramer’s investment picks have captured headlines and the dreams of investors for years. This one-time hyper-successful hedge fund manager-turned television personality attracts a huge audience of investors with his market pontifications.

His following is so influential that a stock market phenomenon, known as the “Cramer Bounce” often occurs after he touts a particular stock. That’s right, this single individual is thought to have the power to move markets.

The Man Behind The Legend
Jim Cramer has reached legendary status on Wall Street with his often uncannily accurate stock calls and hyper-energetic persona. Not only has he amassed millions of followers who hang on his every word, I;ve even seen trading platforms boasting a built-in Jim Cramer stock picks data feed.

But Cramer was not always a public persona. Early in his career as a reporter, he was so poor that he lived in his car for several months. Despite creating popular lead stories for high-profile cases like the Ted Bundy murders, Jim was not satisfied with the low pay of a reporter’s life.

#-ad_banner-#Seeing a legal career as a way out of the low-income lifestyle, he attended from Harvard Law School and was admitted to the New York Bar in 1985. While in law school, Jim developed an interest in the stock market. His stock picks were first placed on his home telephone answering machine as a primitive way to get the word out.

The editor of the New Republic magazine, Martin Peretz, first noticed Cramer’s uncanny stock picking ability and funded him with $500,000 to invest. True to his vision, Jim returned around 30% over the next two years.

After that, Cramer moved into the institutional side of the business. He started with Goldman Sachs as a broker for private wealth clients. Next, he launched a hedge fund — Cramer & Company — which later morphed into Cramer, Berkowitz & Company.

The hedge fund was Cramer’s employment from 1988 to 2000. During this time, the fund only experienced one year of negative returns. It boasted an average annual return of 24% earning Cramer multiple $10 million-plus bonuses.

Feeling the journalism urge, the newly wealthy Cramer retired from the active hedge fund business in 2001. During this time, he was running a side business as ‘editor at large’ at Smart Money magazine and co-founded the popular investing website TheStreet.com.

Jim Cramer’s stock picks televised career started in the 1990s as a co-host and guest on several financial programs. His transformation into a television star began as the co-host of Kudlow & Cramer, morphed into Jim Cramer’s Real Money and then into the current iteration, Mad Money.

How Does Cramer Pick Stocks?
Here are three of Jim Cramer’s stock picking signals:

1. Stocks Making New Highs When The Rest Of The Market Is Down
Jim believes that stocks making new highs against the downward tide of the market are a definite show of strength.

2. Heavy Short-Selling
He screens for stocks that have heavy short activity. Good news can easily create a sharp upward move in a heavily shorting stock. Known as a “short squeeze,” this is one pattern that repeats consistently in the stock market.

3. Coverage By Less Than Six Analysts
Cramer thinks that if a stock is covered by more than six institutional analysts, it is too popular to be a sound investment. Everyone who thought the stock would be a sound investment has already purchased shares, causing the price to settle down.

Jim stresses the importance of using fundamentals to confirm any and all of the above signals before purchasing shares.

My Three Favorite Jim Cramer Stock Picks

1.  EPR Properties (NYSE: EPR)
This is one of Jim’s favorite income-producing stocks. He calls the REIT “terrific,” and it is currently throwing off a 5.5% dividend yield.

Known as a recreational REIT, EPR specializes in recreational- and lifestyle-enhancement type properties. The Street reported that Jim recently spoke with the CEO Greg Silvers, who explained the recent transaction to purchase assets from CNL Lifestyle and help another company, Och-Ziff Capital, finance the purchase of the assets EPR does not want.

Silvers explained that the CNL shareholder vote would be happening early next year and the deal will be accretive. He expects many CNL shareholders to hold onto their EPR shares but noted that EPR would consider a stock buyback if necessary.

Once completed, Silvers said that EPR would be the leader in recreational experiences, with about 10% of their properties being ski resorts.

Shares have recently started moving higher after a pullback to $71.00 per share, creating an ideal buying opportunity.

2. Kimco Realty (NYSE: KIM)
Another REIT on Jim’s favorite stock list, Kimco is a self-administered REIT that owns and manages open-air shopping centers. It currently owns 525 shopping center properties, totaling 85.4 million square feet of gross leasable area across 34 states, Puerto Rico, and Canada.

Shares have recently bounced off their lows and have set up to be an ideal buy at the current price close to $22.00.

3. Flextronics (Nasdaq: FLEX)
This multi-market design, manufacturing, and supply chain solution company recently hit Jim Cramer’s list. The Singapore-based, well-diversified company has medical, automotive, aerospace, defense, mobile devices, semiconductor, capital equipment, and industrial automation divisions, among others.

Price recently bounced off the 50-day simple moving average at $16.00, setting up an ideal long-entry situation.

Risks To Consider: Despite his experience and in-depth knowledge, Jim Cramer stock picks are not always winners. In fact, he has had more than a few high-profile losing stock picks. Always conduct your own research before investing.

Action To Take: Consider these “Mad Money” picks for your own portfolio. Remember to reduce your risk by allocating no more than 2% of your portfolio to any one stock.

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