24/7 Wall St. revised our list of the 50 “Least Transparent” companies for the month of July, and as might be expected, the returns were still dreadful.  In addition, five of the companies had high levels of “Insider Trading” during the period. The data for the original list and revisions come from Audit Integrity.

Among the largest companies, the average return was a negative 7.72% from May 28 to August 30, c
ompared to a drop of 1.45% for the Russell 1000.  The drop among smaller companies was more dramatic with an average return for the same period of negative 17.55%.  Only twelve of the fifty stocks on the lists were up during this time.

“Least Trustworthy” refers to companies that have accounting and governance practices that pose risks to the company – and as a result, to shareholders. These practices include whether financial results may be misrepresented in public disclosures. According to Audit Integrity, “Accounting and governance practices have been shown to be highly predictive of negative events such as SEC enforcement actions, class action shareholder litigation and severe stock loss.

The information underscores the notion that companies with poor disclosure, accounting, and governance practices  are viewed by Wall St. as poor investments.

Douglas A. McIntyre and Charles Stockdale

The 25 Least Transparent Large-Caps

*flagged in August for insider trading