2011 was more or less a wash for stock performance when it was all said and done. There were several great stories and there were many duds. 24/7 Wall St. has compiled a list of what should be considered investor pet peeves, some of which were systemic and some which were very much company specific. If it is an unlucky group, it is only fitting to have thirteen such implosions to review. In a few cases, the price drops seen here were due mostly to outside pressures and some were due to management missteps. By our take, all of the investors in these names are likely very (very-very) happy that 2011 is over.
The thirteen worst big stock and investor stories in 2011 are as follows: Bank of America Corporation (NYSE: BAC); Diamond Foods, Inc. (NASDAQ: DMND); First Solar Inc. (NASDAQ: FSLR); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Hewlett-Packard Company (NYSE: HPQ); Imperial Sugar Co. (NASDAQ: IPSU); iShares Silver Trust (NYSE: SLV); K-V Pharmaceutical Company (NYSE: KV-A); Market Vectors Egypt Index ETF (NYSE: EGPT); Molycorp, Inc. (NYSE: MCP); Netflix, Inc. (NASDAQ: NFLX); Research in Motion Ltd. (NASDAQ: RIMM); and Sears Holdings Corporation (NASDAQ: SHLD).
Are there others? Of course. We just wanted to review the worst of the biggest and most easily recognized stories out there. Some of the explanations and criticisms here may seem a bit raw or overly colorful, but with this motley group what more could you expect…
Bank of America Corporation (NYSE: BAC) has seen almost everything that could go wrong come its way. The bank cannot shake the Countrywide mortgage woes, it drove away customers with proposed new banking fees, and it has been under fire by more agencies and regulatory bodies than we can easily count. The company can hardly get in a settlement that is ultimately not challenged by an outside force. It does not seem like it will get to raise its dividend any time soon and the fear is that perhaps it will need to raise more capital on 2012 stress tests. This was the worst performing stock out of all 30 DJIA components and not even a Warren Buffett investment managed to keep the stock from falling. So what if it half of book value now.
Diamond Foods, Inc. (NASDAQ: DMND) became a sample of what can go wrong at a high growth food company. Eventually the growth peaks and valuations come crashing down. To go from a growing almond and nut products story to a company buying Pringles did not make sense to many, particularly since Diamond was going to be leveraging itself to make the deal. Then came the accounting woes around payments to walnut farmers, and that was then followed by a director’s suicide who was inside the accounting woes story. This was a great story that became very cloudy, just like if I poured a glass of their almond milk that I like so much to try to see through it. After running from about $50 to over $95, shares are now in the low $30-range and shares hit a low of $26.11 recently. They could have found a rat in the milk vats and survived better than the way things turned out for them in 2011.
First Solar Inc. (NASDAQ: FSLR) went from the U.S.’s solar sector poster boy to perhaps the worst performing S&P 500 stock. It is still the leader of the solar sector and that is why this one precedes all other solar stock implosions of 2011. Its CEO resignation or firing came in a rather strange and sudden manner and its prospects do not look much better on the margin front for the next year. Solar panel dumping by Chinese firms and the negative press of the government backing of the failed Solyndra only added to the fears here as short sellers were able to make a fortune here. Shares closed out 2010 around $130 and shares went briefly north of $175 in February. Shares are now around $33.00. First Solar single-handedly turned many 401/K plans into 201/K plans in 2011.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is one implosion which we debated whether or not should be part of a complaint for the full year. Its accounting concerns were actually from 2010 and despite the massive share price drop the stock is actually still up for the year. In fact, shares closed at $32.86 in 2010 and now the stock is around $46.00. What is so bad is that the stock had been one of the best performing stocks as recently as September and the year high is above $115 for the stock. Its growth has peaked, its advertising costs are way up, and Starbucks seems to have scored the better end of the deal between the two coffee companies. Because the stock is still up almost 50% for the year, we’ll back off.
Hewlett-Packard Company (NYSE: HPQ) may have started its woes in 2010 after firing Mark Hurd and then hiring Leo Apotheker, the former head of SAP. Still, the baffled decision to even go along with Leo Apotheker’s decision to jettison the PC business was just too much. And now the decision to keep the PC business seems like it is because the cost of exiting it is just too high. Palm is now dead too. The Apotheker decision to acquire the enterprise software outfit Autonomy for $10 billion. If you overlay a one-year chart as you can see here, you would think that H-P was a bank because its stock tracked the negative performance of Bank of America almost in unison until September. The verdict is out on whether or not Meg Whitman is right fit here, but frankly the stock has stabilized since she took over. H-P shares closed out 2010 at an adjusted $41.48 and shares are now close to $26.00 after hitting a low of $21.50.
Imperial Sugar Co. (NASDAQ: IPSU) was looking a lot like a transformation in the making from a sugar company to a sweetener company looking to branch out into new growth markets. The company even went on a roadshow and got on CNBC to tell its story. Shares even went from roughly $10 to $25 based upon the hype. Then over the summer came news of a wider loss and things have slid further from there. Sadly, it seems that management may have known things were not great when the story changed abruptly and there are class action suits. Now shares are around $3.50. This feels like getting drunk at the casino and losing your life savings with the dealers telling you “Thanks for playing.”