Why Hovnanian Enterprises, XOMA, and Yongye International Tumbled Today

The stock market finished mostly unchanged amid no new news on the international front, but these stocks suffered substantial losses today. Find out what cause their fall.

Mar 5, 2014 at 8:31PM
Longview

Having seen a big drop on Monday and a big jump on Tuesday, stocks took the Goldilocks route Wednesday, as the broader market finished little changed as investors struggled to guess which direction macroeconomic and geopolitical issues will push the stock market next. For shares of Hovnanian Enterprises (NYSE:HOV), XOMA (NASDAQ:XOMA), and Yongye International (NASDAQ: YONG), though, the day was ugly, with those three stocks seeing substantial declines.

Hovnanian fell 10% as the homebuilder reported fiscal first-quarter earnings results that included a doubling of its year-ago loss and just a 1.6% rise in revenue. Deliveries fell more than 4% and net contracts dropped almost 11%, and although Hovnanian reported that its contract backlog had risen both in dollar-terms and number of homes, bad weather this year compared to a favorable selling season last year took its toll on the homebuilder's results. CEO Ara Hovnanian expressed his belief that conditions would improve during the rest of 2014, but investors weren't convinced and sold shares off in response. The drop could prove to be a bargain opportunity, though, if better weather reverses the troubling housing environment. But other factors could cause housing to cool off as well, especially if Fed tapering leads to higher interest rates later this year.

XOMA plunged almost 28% after the biotech company chose not to move forward with late-stage studies of its key osteoarthritis drug gevokizumab. All isn't lost for XOMA on gevokizumab, as the company might have the potential to divide its original target population into segments in an effort to find a group for which the drug is more effective, and the drug might be useful for other treatments. Nevertheless, with investors having had high hopes for the study, XOMA needs to find a new strategy quickly in order to calm shareholders' fears. Moreover, with the biotech sector more broadly having gotten a lot of attention from momentum investors -- and with many stocks in the industry having seen huge price increases -- the tolerance for even temporary failure is relatively low.

Yongye dropped nearly 11% after the Chinese crop-nutrient company said that shareholders had rejected a proposal for the company to go private. The proposal would have paid shareholders $6.69 per share in cash, but some investors argued that the deal would have essentially allowed the buyers to take advantage of low valuations for Chinese small-cap stocks in general and Yongye in particular. With today's rejection, those investors will have a chance to see whether their long-term support of the company will pan out.

Will these stocks bounce back?
Good stocks can come back from setbacks. But there's still a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers