Bad days. We all have them; some of us deserve them. Here are five stocks whose naughty ways drew investors' scorn on Tuesday:
|
Company |
Closing Price |
(5 max) |
Change |
52-Week Range |
|---|---|---|---|---|
|
Colonial BancGroup |
$4.23 |
* |
(11.69%) |
$4.12-$25.50 |
|
Harris & Harris |
$6.73 |
**** |
(11.21%) |
$5.76-$11.79 |
|
M/I Homes |
$17.25 |
* |
(11.04%) |
$7.20-$29.74 |
|
Downey Financial |
$4.43 |
* |
(9.22%) |
$4.41-$70.79 |
|
Washington Mutual |
$6.22 |
* |
(7.85%) |
$5.75-$44.04 |
Sources: The Wall Street Journal, Yahoo! Finance, Motley Fool CAPS.
Naughty?
Well, OK, we can't exactly call these stocks naughty. There are days when five-star winners and newsletter recommendations appear on this list. Today, sadly, is 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 110,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch. You should, too.
Thus, here is today's list of the worst stocks in the world.
Worse
We begin with -- and I hate saying this -- nanotech investor and Rule Breakers recommendation Harris & Harris.
My reasoning is simple: Management says that, as of June 16, the company's net asset value (NAV) per share was $5.77. The stock traded for a 17% premium to that as of yesterday's close; and that's after an 11% haircut.
Much as I -- and insiders -- love Harris & Harris over the long term, I can't see investors conferring much of a premium over NAV before the fund achieves a massive liquidating event for one of its nanotech prospects. That's likely to take years.
Worser
Next up is Washington Mutual, a somewhat frequent guest in this column, which is suffering because fewer consumers are seeking loans.
Applications were down 9% last week, according to the Mortgage Bankers Association. Refinancings -- a staple of the banking business before the credit crunch -- were down 15%, and interest rates are at their highest since last July, according to an Associated Press report.
But this data affects hundreds of banks, right? Why single out WaMu? Two reasons:
- It's the third-largest mortgage originator in the U.S.
- The bank has twice cut its dividend, which means there's nothing left to prop up the shares when bad news like this hits the wires.
Ugh.
Worst
But our winner is Colonial BancGroup, which switched from a national to a state bank charter for Alabama. Colonial, which has been hurt by the housing meltdown in nearby Florida, says the move is aimed at helping customers.
Perhaps that's true, but I'm more concerned about Texas. Colonial's Texas Ratio is rising like Mississippi floodwaters during rainy season. Behold:
|
Metrics (in mil) |
TTM* |
2007 |
2006 |
2005 |
|---|---|---|---|---|
|
90-day past due loans |
$70.6 |
$23.8 |
$8.1 |
$10.3 |
|
Nonperforming loans |
$246.5 |
$121.9 |
$23.3 |
$25.8 |
|
Tangible book value |
$1,107.5 |
$1,202.0 |
$1,383.0 |
$1,237.7 |
|
Allowance for loan losses |
$240.8 |
$238.8 |
$174.9 |
$171.1 |
|
Texas Ratio |
23.5% |
10.1% |
2.0% |
2.6% |
Source: Capital IQ, a division of Standard & Poor's.
*TTM = trailing 12 months ended on March 31, 2008.
Color me jaded but I doubt that Colonial will dump enough underperforming assets to reverse this trend soon, if at all.
Colonial BancGroup and its we-messed-with-Texas-and-got-the-horns loan portfolio ... Tuesday'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.
