Why Hovnanian Enterprises, MBIA, and The Container Store Tumbled Today

Stocks fell slightly to end the first half of the year, although most of the losses were limited in size. Find out why these three stocks did particularly badly today.

Jun 30, 2014 at 6:35PM

Stocks were mixed to slightly lower on Monday, as the last trading day of the first half of 2014 didn't hold many big surprises for investors. On a holiday-shortened week, most investors are waiting for earnings season to start next week, and anticipation for seeing second-quarter financial results has many stocks staying relatively calm. But that wasn't the case for every stock, as Hovnanian Enterprises (NYSE:HOV), MBIA (NYSE:MBI), and The Container Store (NYSE:TCS) fell much more dramatically than the market at large today.

Hovnanian Enterprises fell 2.5%, bucking what for most homebuilders was an extremely positive day. Pending home sales jumped by their biggest level in more than four years this morning, posting a 6.1% gain and reassuring investors in the industry that the cold winter weather merely delayed home-buying activity rather than permanently destroying it. Yet after seeing gains of almost 20% last week alone in the face of equally strong housing data, Hovnanian was likely just ready for a slight pullback. In the long run, a single month's data won't answer the key question of whether the homebuilders can survive higher interest rates and consequent increases in financing costs. If Hovnanian can find ways to sell more homes even when rates rise, it'll go a long way toward debunking bearish theories about affordability in the industry.

MBIA dropped 4%. The insurer of mortgages, municipal bonds, and other financial instruments got downgraded by a Wall Street research firm. One major problem that MBIA and other participants in the muni-bond market have had to deal with lately is an emerging financial crisis in the U.S. territory of Puerto Rico, which faces stifling debt that many believe will eventually require a bailout in order to resolve without systemic risk to the bond market. MBIA in particular is on the hook for a substantial amount of debt, especially that tied to the Puerto Rico Electric Power Authority, and the analysts argue that it's smarter to wait until MBIA gets resolution to its Puerto Rico exposure before committing capital to shares.

The Container Store declined 4% as investors assessed the reasons why the initial public offering of crafts-oriented retail chain Michael's didn't go as well as expected. Michael's and Container Store aren't direct competitors, but Container Store also had a less than welcoming reception from the capital markets since going public late last year. Until U.S. consumers get their feet back under them, a tough retail environment could hold Container Store back from its full potential.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of The Container Store Group. 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.

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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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
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."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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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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