Why Acuity Brands, Fidelity National Financial, and Chesapeake Energy Shares Tumbled Today

Stocks soared on Tuesday, with the Dow narrowly missing the 17,000 level and both it and the S&P 500 reaching new all-time closing highs. Even as investors celebrated the beginning of a new quarter, though, not every stock managed to post such impressive gains. In particular, Acuity Brands (NYSE: AYI  ) , Fidelity National Financial (NYSE: FNF  ) , and Chesapeake Energy (NYSE: CHK  ) saw the most extreme share-price declines on the day, although for Fidelity National and Chesapeake Energy there were extenuating circumstances justifying the drop.

Source: Acuity Brands.

Acuity Brands dropped 15% after reporting disappointing results for its fiscal third quarter. Revenue climbed 11.5%, sending net income up 38%, yet the maker of lighting products fell well short of the even faster growth that investors had hoped to see from the company. CEO Vernon Nagel argued that the results were consistent with the company's longer-term strategy to encourage adoption of LED lighting and boost its leadership in the lighting space. Yet the path to LED lighting might be more difficult that Acuity is projecting, given the fact that consumers have already been asked to replace incandescent bulbs with compact fluorescents and could be reluctant to make yet another costly switch.

Fidelity National Financial saw its share price drop 13%, but the decline was largely due to the title-insurance provider's distribution of tracking stock of its Fidelity National Financial Ventures affiliate. As a result of the move, shareholders in Fidelity National Financial will receive one share of FNFV Group stock for every three shares of Fidelity National stock owned prior to the split. Based on where FNFV shares finished the day, Fidelity National Financial actually gained ground on Tuesday, and the split will enable investors to choose which part of the company's business areas they want exposure to within their portfolios.


Source: Chesapeake Energy.

Similarly, Chesapeake Energy shares saw their price decline by 6%, but that decline came as a result of Chesapeake's spinoff of its Seventy Seven Energy oilfield services business. Under the spinoff, shareholders of Chesapeake will get one share of Seventy Seven Energy for every 14 shares of Chesapeake stock they owned, and based on today's close, the value of Seventy Seven Energy shares received will all but completely offset the drop in Chesapeake's share price. The move represents yet another way in which Chesapeake has made moves to focus on its most promising assets, divesting or spinning off non-core assets to help make the surviving entity leaner and more agile.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3015333, ~/Articles/ArticleHandler.aspx, 11/28/2014 6:16:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement