Why SunEdison Inc (SUNE), Energy Transfer Partners LP (ETP) and Sunstone Hotel Investors Inc (SHO) Are 3 of Today’s Worst Stocks

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The Santa Claus rally went back into high gear on Tuesday, after taking a break over the course of the previous two trading days. When all was said and done, the S&P 500 finished the session up 1.06%, at 2078.36.

Why SunEdison Inc (SUNE), Energy Transfer Partners LP (ETP) and Sunstone Hotel Investors Inc (SHO) Are 3 of Today's Worst StocksNot every stock participated in the rally, however.

In fact, Sunstone Hotel Investors Inc (NYSE:SHO), SunEdison Inc (NYSE:SUNE) and Energy Transfer Partners LP (NYSE:ETP) were all suspiciously left out of the rally.

Here’s what investors need to know.

Sunstone Hotel Investors Inc (SHO)

It was a bad day for most REITs, but it was a downright miserable one for owners of Sunstone Hotel Investors. SHO led the way lower, losing more than 8% of its value.

There was no company-specific reason SHO lost as much ground as it did. Rather, the tide turned against Sunstone Hotel Investors and its peers. Namely, after waffling for more than a week after the Federal Reserve decided to begin raising rates, yields finally started to get solid traction today. The yield on 30-year Treasury bonds, for example, jumped 3.44% to an effective interest rate of 3.041%.

That worked against the value of SHO and other REITs, as they tend to trade with bonds, falling in value to increase their dividend yield.

Energy Transfer Partners LP (ETP)

Stronger interest rates aren’t tough on just REITs because they’re designed to drive cash payments to investors. Limited partnerships and their master limited partnership counterparts are also designed to be tax-advantaged ways to distribute income, and for the same reason REITs struggled today, so did a whole slew of LPs and MLPs.

Leading that charge was Energy Transfer Partners LP. Even though ETP only lost a palatable 1.3% of its value today, that still pours salt on the wounds left behind by the 48% pullback ETP had dished out to shareholders since the middle of this year.

Still, with Energy Transfer Partners sporting a yield of well more than 12%, some investors can overlook the risk of rising interest rates and stomach the inherent risk of fishing for a bottom in oil and gas prices … which could prove favorable for ETP.

SunEdison Inc (SUNE)

Last but not least, SunEdison shares lost nearly 9% today on the heels of a public response to its recent decision to raise money.

To be fair, had the decision been made at another time or against a different backdrop, the glass could have been seen as half-full. In the shadow of some public bickering with a key shareholder with the threat of litigation looming, however, the market saw the glass as half-empty for SUNE.

Fanning the bearish flames for SUNE was UBS analyst Julien Dumoulin-Smith, who questioned the costs that will be associated with the fundraiser by saying:

“With the contemplated $650 Mn second-lien credit financing likely refinancing the $169 Mn GS term-loan (due in August at an all-in effective rate of ~15%), we see this as the next key datapoint for shares. Ability to raise debt capital on palatable terms (eg- without increasing its cash interest expense) would appear a positive, particularly with the facility extending incremental liquidity. Every dollar counts in this environment. Risk to shares relates primarily to closing terms incl. any associated equity raise/warrants.”

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/12/sunedison-inc-sune-energy-transfer-partners-lp-etp-sunstone-hotel-investors-inc-sho-3-todays-worst-stocks/.

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