Why BlackBerry, MGIC Investment, and Herbalife Tumbled Today

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.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

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

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: 3031948, ~/Articles/ArticleHandler.aspx, 8/28/2015 11:03:47 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...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated Moments ago Sponsored by:
DOW 16,573.16 -81.61 -0.49%
S&P 500 1,983.93 -3.73 -0.19%
NASD 4,798.59 -14.12 -0.29%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 10:48 AM
BBRY $7.32 Up +0.13 +1.81%
BlackBerry CAPS Rating: *
HLF $57.20 Down -0.43 -0.75%
Herbalife CAPS Rating: *
MTG $10.48 Down -0.01 -0.10%
MGIC Investment Co… CAPS Rating: **
AAPL $111.86 Down -1.06 -0.94%
Apple CAPS Rating: ****
IBM $147.33 Down -1.21 -0.81%
International Busi… CAPS Rating: ****