Wednesday's Worst Stocks in the World

Bad days. We all have them; some of us deserve them.

Here are five stocks whose naughty ways drew investors' scorn on Wednesday:


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Genentech (NYSE:DNA)





US Airways (NYSE:LCC)





Brookfield Homes (NYSE:BHS)





Sources: The Wall Street Journal, Yahoo! Finance, Motley Fool CAPS.

Well, OK, we can't exactly call these stocks naughty. But none of them gets much love from our 76,000-person-strong Motley Fool CAPS community of amateur and professional stock pickers.

To the contrary -- when it comes to these stocks, CAPS investors have gone thumbs down more often than film critic Roger Ebert. They believe that none of these stocks are worth owning and that some may be worth shorting.

Which of today's candidates is worst? Read on, dear Fool.

We begin with Genentech, a four-star stock you'll not often find on this list. Here's why it makes the cut today: An FDA advisory panel has recommended that regulators not add breast cancer to the list of ailments for which its drug Avastin may serve as a treatment.

Here's why that's bad: Press reports say that doctors often turn to Avastin "off label," and in concert with chemotherapy, as a treatment for certain kinds of breast cancer. That may have contributed to a massive 54% spike in U.S. sales of Avastin, which, at $1.75 billion, accounted for nearly one-fifth of Genentech's 2006 revenue.

Now, here's why Genentech isn't further down on today's list: For as much as Genentech depends on Avastin, the stock trades at a price-to-earnings ratio that's about even with its projected long-term growth rate and has a history of producing excellent cash flow and returns on capital.

Next up is mortgage insurer MBIA, which on Wednesday was subject to a sell-off after Moody's said the company was likely to fall short of capital requirements. Shocking.

But what I really love is MBIA's follow-up press release. It's the perfect non-denial denial. Quoting:

We note Moody's announcement concerning financial guarantors. Contrary to some press reports, Moody's has not taken any rating actions with respect to MBIA. Moody's indicated that, similar to several other monoline insurers, MBIA is somewhat likely to require additional capital. The Company believes that maintaining a strong balance sheet and an adequate capital cushion is prudent. Therefore, the Company has been pursuing capital contingency plans, even in the absence of any immediate rating agency requirements. (Emphasis added.)

Having a strong balance sheet is good business? You don't say!

But our winner is Brookfield Homes, which, after months of insider buying, is finally seeing some selling. From the top finance guy. (Uh-oh.)

Chief Financial Officer Paul Kerrigan yesterday dumped a total of 139,000 shares, or more than 50% of his direct holdings (after accounting for 35,206 shares acquired via options).

But that still leaves Kerrigan with 121,206 shares, according to this Form 4 filing. Not bad, right? Not at all. But I find it interesting that Kerrigan owned 306,825 shares as of Feb. 15. Anyone else see an inconsistency here? Do the math with me: 306,825-139,000 = 167,825.

Looking at footnote 2 on page 6 of the latest proxy shows that the "missing" 47,000 or so shares are unexercised options. Even so, were we to add them back in, it's fair to say that -- since February -- Kerrigan has cut his stake by roughly 46%.


Brookfield Homes and its share-selling CFO... Wednesday's worst stock in the CAPS world.

Do you agree? Disagree? Let us know what you think by signing up for CAPS today. It's 100% free to participate.

See you back here tomorrow for more stock horror stories.

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Related Tickers

3/31/2011 4:04 PM
BHS.DL $9.40 Down +0.00 +0.00%
Brookfield Homes C… CAPS Rating: *
MBI $7.94 Down -0.03 -0.38%
MBIA CAPS Rating: *
DNA $94.97 Down +0.00 +0.00%
Genentech CAPS Rating: ****
LCC.DL $0.00 Down +0.00 +0.00%
US Airways Group CAPS Rating: *