Monday'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 Monday:


Closing Price

CAPS Rating

(5 Max)










Hewitt Associates (NYSE:HEW)





Countrywide Financial (NYSE:CFC)





Aventine Renewable Energy (NYSE:AVR)










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

Well, OK, we can't exactly call these stocks naughty. There are days when five-star winners and Motley Fool newsletter recommendations appear on this list. Today isn't one of those days.

If you're an investor, you'll have plenty of bad days. The trick is to avoid dating -- or, worse, marrying -- your losers. That's why I listen when our 100,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch. You should listen, too.

Thus, here is today's list of the worst stocks in the world.

We begin with Aventine Renewable Energy, which a Lehman Brothers analyst panned for having too little cash to fund aggressive expansion.

Seems right to me. Quoting from Aventine's first-quarter press release: "Total liquidity available to us at the end of Q1'08 was $206.1 million, comprised of $74.0 million in cash and cash equivalents and $132.1 million available under our existing secured revolving credit facility. After utilization of our current available resources, should we not be successful in our current efforts to increase liquidity on a timely basis and on acceptable terms, we will have to either attempt to raise additional funds or slow down the construction of our new facilities, or both." [Emphasis added.]

Aventine, whose liquidity issues aren't new and which hasn't produced a dime of free cash flow since 2005, plans $260 million to $265 million more in capital spending through the remainder of 2008, the vast majority for expansion.

Next up is Countrywide Financial, with an analyst at Friedman, Billings, Ramsey saying that Bank of America (NYSE: BAC  ) would do well to walk away from its $4 billion deal for the troubled lender.

Why? FBR says that with $20 billion to $30 billion in potential writedowns at Countrywide, the stock could be worth as little as zero. At the very least, FBR speculates, it's likely that B of A will abdicate responsibility for loan losses to bondholders.

Whether that's right or not is immaterial. We know from the Bear Stearns meltdown that negative market sentiment carries nearly as much weight as a poor financial report.

But our winner is -- surprise! -- Yahoo!, whose rejection of a $33-per-share bid from Microsoft (Nasdaq: MSFT  ) left Mr. Softy with cold feet.

Shares of Yahoo! tanked on the news and have yet to recover. You know why. Shareholders wanted a deal. Now, they want out.

Can you blame them? Foolish colleague Rick Munarriz can't. Investors, he writes, "will clamor for change, and likely get it."

Perhaps sooner than any of us had expected. CEO Jerry Yang this morning says he's open to further talks. That stance, to me, suggests that his so-called "negotiations" were nothing more than a game of chicken. A game that Yahoo! just lost.

Yahoo! and its caught-in-the-headlights CEO ... Monday'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.

I'll be back tomorrow with more stock horror stories. and Rule Breakers contributor Tim Beyers, who is ranked 17,758 out of more than 100,000 participants in CAPS, hopes that Keith Olbermann doesn't mind the blatant theft of his "Worst Person in the World" segment from Countdown. Imitation is the sincerest form of flattery, after all.

Bank of America is an Income Investor recommendation. Microsoft is an Inside Value pick. Try either of these market-beating services free for 30 days. There's no obligation to subscribe.

Tim didn't own shares of any of the stocks mentioned in this article at the time of publication. The Motley Fool's disclosure policy thinks cooked spinach is the worst veggie in the world.

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3/27/2009 4:02 PM
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