Thursday's Worst Stocks in the World

Bad days. We all have them; some of us deserve them.

Here are five stocks whose naughty ways drew investors' scorn on Thursday:

Naughty?
Well, OK, we can't exactly call these stocks naughty. But none of them get much love from our 72,000-strong Motley Fool CAPS community of amateur and professional stock pickers.

To the contrary -- when it comes to these stocks, CAPS investors have gone thumbs down more often than film critic Roger Ebert. They don't believe any of these stocks are worth owning, and that some may be worth shorting.

Which of today's candidates is worst? Read on, dear Fool.

Worse
We begin with Ambac Financial, which took a beating over investor fears that it'll be subject to massive insurance losses. Management says otherwise, of course.

But Foolish investors make me wonder if the market is right. Here's how CAPS All-Star SteveInChicago put it in September:

We're seeing a spike in foreclosures. Granted, they didn't insure the worst of subprime, but at some point, they might hit a cash flow problem. When they do, refinancing in a credit crunch could make it a front page story. At best, things don't look good.

Ambac's shares are down 60% since he wrote that, and he's yet to close the position.

Worser
Next up is Valeant Pharmaceuticals, which posted a third-quarter loss of $0.13 a share on lower revenue.

A slew of problems surfaced during the quarter. U.S. sales stalled. Distribution issues cropped up in Mexico. And royalties from Roche for its hepatitis C treatment ribavirin disappeared with the expiration of patent coverage for the drug in Europe.

As bad as all that is, Valeant makes our list for its decision to sell Infergen, another hepatitis C drug. Don't get me wrong; the proposal itself makes sense. Valeant says that Infergen cost it $18.6 million in Q3 but produced just $8.6 million in revenue.

My beef is with the company's spotty record when it comes to producing remedies like Infergen. CAPS investor zzlangerhans explains:

Don't like this company much, mainly because I have no confidence in their R&D. Taribavirin flopped big time in VISER phase III trials in 2006 and [the] company is back in phase II pursuing it at a higher dosage. I thought dosage was supposed to get figured out in phases I and II. The market never really responded to the VISER trial failures.

Retigabine phase III trials are getting enrolled but there are so many seizure meds now, this will unlikely ever be more than a niche product even if the trials are successful.

... all of their marketed medications appear to be infrequently used with possibly diminishing demand. Pergolide, for example, was recently deemed defunct by the FDA.

Translation: Infergen is the latest on a list of way too many misses versus not enough hits.

Worst
But our winner is Crocs, which reported impressive revenue and earnings gains but also huge -- and potentially dangerous -- spikes in inventory and accounts receivable.

Yet none of that is why Crocs tops today's list of losers. A press release from last night did the trick. Quoting:

Crocs, Inc. today announced that its Board of Directors approved an authorization to repurchase up to 1 million shares of its common stock, effective immediately. Share repurchases under this authorization may be made in the open market or in privately negotiated transactions.

On the surface, there's nothing at all wrong with this move. It may even be good, if, that is, the stock is undervalued. But that's extremely hard to believe; the math just doesn't work.

But even if it did, I'd still be wary of any buyback where management was selling shares. That's what we have with Crocs. Insiders have dumped nearly $280 million in stock over the past 52 weeks. Not a single buyer has emerged during that period.

Folks, if you're willing to spend shareholders' cash on this stock, then  frankly, you ought to be packing away the parachutes and spending some of your own moola, too.

Crocs and its maybe-they'll-leave-us-alone-if-we-buy-back-some-shares management team ... Thursday's worst stock in the CAPS world.

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See you back here Monday for more stock horror stories.