Why Nordic American Tankers, Banc of California, and Rite Aid Slumped Today

These stocks fell further than the overall market. Find out why.

Dan Caplinger
Dan Caplinger
Jan 23, 2017 at 5:56PM
Energy, Materials, and Utilities

The stock market stayed relatively quiet on Monday despite being the first full market day of the Trump presidency. Major market benchmarks eased lower, with the Nasdaq remaining nearly flat but the S&P 500 and Dow falling a bit more on a percentage basis. With little of import happening over the weekend, investors appear to be in a holding pattern as they wait to see how the new administration handles the items on its priority list. Some companies weren't so lucky on Monday, however, falling in response to various industry and business-specific issues. Among the worst performers on the day were Nordic American Tankers (NYSE:NAT), Banc of California (NYSE:BANC), and Rite Aid (NYSE:RAD). Below, we'll look more closely at these stocks to tell you why they did so poorly.

Image source: Getty Images.

Nordic American cuts its dividend again

Nordic American Tankers dropped more than 8% on Monday after giving investors bad news on the dividend front. The tanker shipping company said that it would pay a cash dividend of $0.20 per share, heralding the payout as the 78th consecutive quarter in which Nordic American had paid dividends. Yet despite that 20-year track record of dividends, investors focused on the fact that the quarterly payment was down by nearly 25% from the $0.26 per share that it paid last quarter, and the reduction is the second in three quarters that has had the net effect of slicing the distribution by more than half. Part of the problem is that Nordic American is conserving cash to pay for three newly built Suezmax tankers, with the anticipation of taking delivery in late 2018. Nevertheless, those seeking current income will be frustrated with the company's move.

Banc of California sees CEO resign in wake of internal investigation

Banc of California fell 9% after the regional bank provided an update on its investigation into outside allegations and began its succession process following the resignation of CEO Steven Sugarman. In October, an anonymous blog post made allegations connecting the bank and its executives to what it termed "notorious criminals." At this point, Banc of California hasn't found any legal violations, but it did say that it discovered press releases that had inaccurate statements. Robert Sznewajs will take Sugarman's place on the board of directors as its chair, and in the interim, the bank's chief risk officer and chief strategy officer will lead its new "office of the CEO/President." Of more import was the bank's revelation of an SEC formal order of investigation dated January 12, along with a subpoena for certain documents related to the issue. Depending on its eventual findings, the investigation could hang over Banc of California's head for quite a while.

Rite Aid keeps falling

Finally, Rite Aid declined another 7.5%. The drugstore chain continues to suffer from concerns expressed late last week that its proposed merger with Walgreens Boots Alliance (NASDAQ:WBA) might not go through as planned. Already, the stock trades more than $2 per share below the $9 merger price, reflecting considerable skepticism that Rite Aid's efforts to divest a substantial of its store base to a viable competitor will be enough to satisfy antitrust regulators. A termination of the merger would leave Rite Aid shareholders without the $9 per share price, and even the $325 million termination fee that Walgreens would owe Rite Aid if it can't get approval for the deal would only amount to about $0.30 per share of cash. With an already extended deadline between the two parties set to expire on Friday, Jan. 27, Rite Aid will have to move fast to avoid big problems ahead.

Editor's note: A previous version of this article mistakenly said that Rite Aid would owe Walgreens a termination fee if the companies couldn't obtain approval of their merger. The author and the Fool regret the error.