Wall Street opened the new week on a largely positive note, with solid gains for most major benchmarks. On the whole, investors were content to see no escalation in trade disputes between the U.S. and China and no additional evidence that the global economy could weaken further. Yet that didn't stop some stocks from losing significant ground on Monday. Infosys (INFY 0.15%), Micro Focus International (MFGP +0.00%), and Innophos Holdings (IPHS +0.00%) were among the worst performers. Here's why they did so poorly.
Infosys deals with controversy
Shares of Infosys dropped 12% after the Indian IT services specialist announced allegations from whistle-blowing employees of unethical practices within the company's executive leadership. Reports suggested that the complaints included assertions that executives weren't going through the required review and approval process for major new customer agreements. In general, high demand for technology consulting services from a wide range of enterprise customers has lifted shares of tech services companies like Infosys over the past several years. But a loss of confidence in leadership could reverse that trend and leave Infosys falling behind its competitors.
Image source: Infosys.
Micro Focus gets stood up
Micro Focus International saw its stock fall 14% as investors dealt with the disappointment of not getting a hoped-for acquisition bid. On Friday, shares of the infrastructure software company spiked higher on rumors that Open Text was looking at a possible takeover bid for Micro Focus. Yet over the weekend, Open Text said that it was not in fact considering a buyout of Micro Focus. That marks another in a string of tough breaks for Micro Focus, which has struggled to address what it's called "a deteriorating macro environment."
Innophos gets a disappointing deal
Finally, shares of Innophos Holdings declined 9%. The maker of food additives received a buyout bid from private equity investors at One Rock Capital Partners, which would usually be good news for an acquisition target. However, the amount of the bid was less than investors had hoped, coming in at $32 per share and valuating Innophos at about $932 million. CEO Kim Ann Mink confirmed the board of directors' belief that the One Rock offer was in the best interest of all stakeholders and should help Innophos execute on its long-term growth strategy. Yet shareholders had hoped for a higher premium to where the stock's price had been before takeover speculation arose earlier this month. Even after the decline, Innophos trades slightly above the $32-per0share mark, suggesting hope for a rival bid for the long-struggling company.
