Despite a strong bullish finish to Friday’s trading session, investors didn’t come back to the table on Monday with the same zeal. When all was said and done, the S&P 500 ended the day at 2019.64, down 0.13%.
Some investors would have been thrilled with a lethargic day, though … like owners of ArcelorMittal SA (ADR) (NYSE:MT), Acorda Therapeutics Inc (NASDAQ:ACOR) and Petroleo Brasileiro SA Petrobras (ADR)(NYSE:PBR). These three names were among the worst of the worst performers.
Here’s what happened.
Petroleo Brasileiro SA Petrobras (ADR) (PBR)
Just when it looks like Brazilian oil company has put a storm of worst-case scenarios behind it, another log is put on the dying fire.
The past year and a half has been nothing less than miserable for PBR owners. Aside from the implosion of crude oil prices throwing the industry’s companies over a cliff, political scandal in Brazil has infected state-owned outfits like Petrobras, driving PBR shares from a high near $21 in September of 2014 to a low of less than $3 in January of this year.
The near 80% rebound from January’s lows hinted of better days, but that waning rally was dealt a major blow today when the country’s prosecutors issued a demand of $2 billion in damages stemming from its corrupt practices. Whether Petrobras will legally be forced to pay that penalty remains to be seen, but either way, it’s one more headache the company didn’t need.
Of course, the 3% plunge in the price of oil didn’t help.
PBR ended the day down more than 5%.
ArcelorMittal SA (ADR) (MT)
Much like PBR, shares of steel company ArcelorMittal had been acting like they’re finally on the road to recovery, gaining nearly 78% between their mid-February’s lows and Friday’s close. A positive stance on the company’s future following a shareholder meeting that decided it would issue stock to raise funds fanned the bullish flames, as did an upgrade from Morgan Stanley.
That optimism was wiped away on Monday, though, when the premise of that fund-raiser became a harsh reality. ArcelorMittal is aiming to raise $3 billion by issuing new shares at a 35% discount to Thursday’s closing price.
Although the cash inflow will reduce debt, between the discount and the fact that the cash injection does little to shore up the company’s money-losing operation., MT fell more than 19% on the pricing terms of the deal.
Acorda Therapeutics Inc (ACOR)
Finally, Acorda Therapeutics shares fell another 7% on Monday after losing 8% of their value on Friday.
The pullback was prodded by news that Kyle Bass, hedge fund manager and founder for the Coalition for Affordable Drugs, is challenging a key patent currently ownered and used by ACOR.
The challenge actually began in the fall of last year, but with a rocky start. Bass petitioned the U.S. Patent and Trademark Office to invalidate the two patents protecting multiple sclerosis drug Ampyra, but the agency wouldn’t even consider it at the time because he has basing his argument on information not available to the public. Acorda Therapeutics has confirmed in the meantime, though, that the Patent Office’s review board has officially begun the review Bass couldn’t initiate just a few months ago. While a review is not necessarily a sign that the ACOR patent will be revoked, it does put the value of Ampyra in jeopardy.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
