Why The ADT Corporation, Diamond Offshore Drilling Inc., and Boston Scientific Are Today's 3 Worst Stocks

Corporate raiders, falling commodities prices and a struggling sector send these stocks towards the bottom of the market

Mar 12, 2014 at 7:42PM

Investors were decidedly undecided on Wednesday, sending 50.2% of publicly traded companies higher, relegating the other 49.8% to finish in the red or that dreaded grey zone known as purgatory. Considering the unusual balancing act Wall Street put on Wednesday, it's worthwhile to examine some of the most unbalanced performers in today's market. Specifically, what were the most unpopular stocks today and why? Below, we examine why the ADT Corporation (NYSE:ADT), Diamond Offshore Drilling (NYSE:DO), and Boston Scientific Corporation (NYSE:BSX) underperformed the S&P 500 Index (SNPINDEX:^GSPC) so dramatically as the benchmark went on to add 0.6 points, or less than 0.1%, to end at 1,868. 

Shares of the ADT Corporation, which lost 3.3% Wednesday, have seen better days, and for that matter, weeks. The stock lost its way to the bottom of the S&P Wednesday, plaguing investors with a fifth straight day of losses. A major reason behind the security systems leader's slump is ironically a lack of defense against the slimy techniques of Wall Street titans. Keith Meister, head of the hedge fund Corvex Management LP, built a large position in ADT stock through his fund in 2012, and subsequently levered the company to the hilt for the purpose of share buybacks. Briefly a board member, Meister washed his hands of ADT last year, leaving a mountain of debt as his legacy. This sort of behavior frankly speaking, is why Main Street hates Wall Street.

In sharp contrast to Meister, who was in and out of ADT stock faster than Popeye could eat a leaf of spinach, Main Street loves to see insiders with some skin in the long-term performance of the stock. And while insider trading is by no means a fully decipherable language for individual investors to decode for profits, there's no question that insider buying is a positive sign. Despite a reassuring purchase last month -- in which one Diamond Offshore Drilling director initiated a $140,000 position in his employer -- the stock shed 2.4% Wednesday. With the price of oil and natural gas both down more than 2% today, it's only natural for rig stocks like Diamond Offshore Drilling to suffer, as their customers become less inclined to pony up for the rights to excavate a resource with declining value.

Finally, shares of Boston Scientific Corporation fell for a third straight day, slumping 2.3%. This is a bit of a head-scratcher, especially considering the fact that the prescient SAC Capital Advisors recently disclosed it was building its stake in the medical devices company. Of course, much of SAC's previous "prescience" has indeed been the result of illegal trading in which the fund profited from insider knowledge, and it's wrong to benefit indirectly from insider knowledge anyhow, so the point is moot.

While Boston Scientific's latest quarter exceeded Wall Street expectations, the health care sector has seen better days; President Obama is currently scrambling to sign up the youth of America for Obamacare coverage, even making an appearance with comedian Zach Galifianakis on his Web series Between Two Ferns to promote the initiative.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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