Cramer says S1 is private equity bait

Jim Cramer may deserve a lot of praise, but in our analysis consistency is not one of his strong points. Tonight on MAD MONEY he looked into his crystal ball and showed us the future. Before seeing the future, though, he had to take us to the past ... not far, naturally. Just back to Monday morning, and pretend you owned Open Solutions Inc. (NASDAQ:OPEN). If you did own OPEN, you would have been up $7 on the buyout.

What is he finding in his crystal ball? No, it's not Dorothy and her little dog, too. It's "THE NEXT OPEN."

He says the next OPEN is S1 Corporation (NASDAQ:SONE). He said that Carlyle and another private equity group is buying OPEN,and they may sell some off and keep some. Private equity firms, he says, are the buyers of last resort these days. Not only that, but they tend to parrot one another. If you were a private equity firm, and you were looking for something like OPEN, you would find SONE. SONE offers solutions instead of just software, and three-quarters of the company's business is recurring.

He also wanted to go over the fundamentals. SONE dropped the ball with no growth in 2005, and he thinks they are back on track in 2006. Cramer said if you start adding this in after a couple days it will work. He said they also have some tax credits that will keep it from paying out too much in taxes.

SONE closed down 0.8% today, but shares have now jumped more than 15% to $5.80 in after-hours trading.

So much for Cramer's attitude of "We don't want to buy stocks just because they could be buyout candidates."

Jon Ogg is a partner in 24/7 Wall St. LLC; he does not own securities in the companies he covers.