Why BlackBerry, MGIC Investment, and Herbalife Tumbled Today

Even as positive news pulled stock markets higher, these three stocks got left out. Find out why.

Jul 16, 2014 at 6:19PM

Enthusiasm about the continued success of the U.S. economy helped push the stock market higher today, with high-profile earnings reports sending the Dow to a new all-time record high. Yet, despite positive signs that merger and acquisition activity and increased stock buybacks could keep lifting markets beyond current levels, some stocks didn't join in those gains, with BlackBerry (NASDAQ:BBRY), MGIC Investment (NYSE:MTG), and Herbalife (NYSE:HLF) among the worst performers in the stock market on Wednesday.


BlackBerry dropped 12% as the smartphone pioneer took pressure from a deal between Apple (NASDAQ:AAPL) and IBM (NYSE:IBM) to target the enterprise mobility-solutions market. The deal involves a partnership to build more than 100 new apps for clients who need high levels of security and reliability for their mobile devices. Given the fact that BlackBerry CEO John Chen has identified enterprise mobility as the key element of the company's turnaround, the fact that two high-profile tech companies are going head-to-head against BlackBerry threatens outright disaster for the company's stock. Given the enterprise relationships that IBM has, and the reputation that Apple devices have built, BlackBerry will face a significant challenge to keep moving forward.

MGIC fell 7% as the mortgage-insurance company failed to match expectations in its quarterly earnings report this morning. MGIC managed to earn $0.12 per share, which represents a solid turnaround for the insurer compared to the consistent losses it posted in the aftermath of the financial crisis. Yet, even though the housing market has gained a lot of ground in recent years, changes in regulatory requirements for mortgage insurers to be involved in agency-conforming mortgage loans could leave MGIC with inadequate capital. The necessary steps to comply with new regulations could, in turn, reduce MGIC's returns on capital, and if the housing market weakens, it could create another downturn for MGIC going forward.

Source: Herbalife.

Herbalife declined 5% as the maker of nutritional products braces for potentially negative news next week. According to reports from the New York Post, activist investor Bill Ackman expects to reveal his findings after two years of investigation into Herbalife, and the results are likely to support Ackman's contention that the company is a pyramid scheme involving its distributor base. So far, though, Herbalife has managed to survive similar allegations in the past, and several investors, including Carl Icahn, have taken the other side of Ackman's short position in the company's stock. In the meantime, Herbalife needs to keep executing its business strategy and prove Ackman's allegations wrong in order to appease skeptical investors that its profit potential is real.

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Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and International Business Machines and has the following options: long January 2016 $57 calls on Herbalife. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

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."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

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." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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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