This Week's 5 Dumbest Stock Moves

Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. Book burning
A major investor is turning the page on Barnes & Noble  (NYSE: BKS  ) . John Malone's eclectic media empire is reducing its stake in the struggling bookseller, filing to sell 90% of its shares in a move that will lower Malone's stake from 17% to less than 2%.

Barnes & Noble has been struggling as bibliophiles turn to digital reads, and the chain's bold foray into e-readers with the Nook has flopped. Investors have still stuck around, hoping for a buyout offer or a turnaround. It seems as if one sizable investors has had enough. The stock shed 14% of its value on the news yesterday.

2. Joanie doesn't love CACI 
CACI  (NYSE: CACI  )  doesn't report financial results until the end of this month, but it still chimed in with a problematic outlook. The provider of information solutions now sees a profit of $5.12 per share to $5.51 per share on $3.5 billion to $3.6 billion in revenue. Wall Street was targeting net income of $5.78 per share on revenue of $3.71 billion.

Contractor orders have slowed since the passage of the omnibus appropriations bill. CACI has also been slowed by reductions in Afghanistan-related material purchases and lower run rates for its professional-services contracts.  In the end, the market doesn't like to be disappointed. 

3. Nine lives
Legendary fund-manager Bill Gross has hit hard times. Outflows continue at a torrid pace for his iconic PIMCO Total Return Fund. It's hard to keep investors around when you're you've delivered a small loss over the past year at a time when most funds have posted healthy gains.

Many media outlets are taking Gross to task for using his recently deceased cat as fodder for this week's latest fund update, but that's not why this story makes the cut as a "dumb" move. PIMCO Total Return experienced $3.1 billion in outflows for the month of March, experiencing 11 consecutive months of greater outflows than inflows.

4. Rough seas ahead
SeaWorld  (NYSE: SEAS  )  is still struggling with its turnstile clicks.

The marine life theme park operator warned that it welcomed just 3 million guests at its parks during the quarter, well short of the 3.5 million visitors that it entertained during last year's first quarter. Other theme and amusement park operators seem to be holding up reasonably well, so clearly the Blackfish documentary continues to peck away at SeaWorld's fundamentals. 

SeaWorld is sticking to the revenue and adjusted EBITDA guidance that it initiated last month, but clearly it will have to get more aggressive in promoting its attractions at a time when a growing number of people are turning on its practice of keeping killer whales in captivity.

5. Liquidity concerns
Shareholders of Liquidity Services (NASDAQ: LQDT  ) have had a rough April. The stock has fallen nearly 30% through Thursday's close, falling sharply in each of the month's first three trading days.

The surplus-liquidating marketplace operator slumped after providing updates on bidding results for the U.S. Department of Defense non-rolling-stock and rolling-stock surplus contracts. Investors weren't happy with how high it had to bid to win the non-rolling-stock contract. It then followed that up by withdrawing from the live auction for the rolling-stock contract after that, too, got out of hand.

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  • Report this Comment On April 05, 2014, at 5:14 AM, kickbishopbrenna wrote:

    Rick, why are these dumb? seems to me avoiding these 5 examples would be downright sensible? You mean dumb to buy them or dumb because of the moves the holders made?? I note BKS is a recommended stock in one portfolio (MFO) and it raised a few eyebrows (well, 2..mine!) at that time, looks like it just might squeak a profit as the BKS recommendation expires in under 2 weeks.

    Brendan,

    confused.

  • Report this Comment On April 07, 2014, at 8:43 AM, hostiletrader wrote:

    I agree with Brendan, you didn't show how these were dumb moves. Dumb for the companies? Dumb to have bought them? Dumb to have sold them? Your article was hastily written and should have been edited better.

  • Report this Comment On April 17, 2014, at 12:31 PM, Maxwell0819 wrote:

    Glad it wasn't just me feeling dumb for not finding the dumb moves. Just plain dumb. Rick, please add the 'what' or 'why' these are dumb.

    Max

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