Grab some popcorn and get ready to take in a whole lot of drama…
It’s been quite the ride for investors in 2015. From the highs of the summer months to muddling along the rest of the year, the market provided (as it usually does) its share of heartaches and gains.
For some investors, the heartache resulted from major problems affecting some of the stocks in their portfolios, with some still suffering from jaw-dropping events that will reverberate well into 2016.
Here are some of the most eventful corporate moments (and people) in the news for 2015…
Where to start with the Yahoo! (YHOO) debacle…
How about the 30% drop in the stock price?
Yahoo! has lived on the edge for years, muddling around trying to find a sound strategy to re-energize itself, while Alibaba (BABA) supported, if not outright held up, its stock price for the last two years.
The Marissa Mayer magic is over, and now that Yahoo is completely out of the BABA tax-free spinoff mode, it has almost no place to go. Spinning off its core business is a Hail Mary of the first order, and nobody has yet come forward showing interest in the company—at least not publicly.
Yahoo! is a mess, despite having millions of users, cash, and some viable properties. It might not get any better in 2016, either.
Here’s another 30% year-to-date stock collapse mess.
With Qualcomm (QCOM) struggling to increase revenues, fighting off antitrust issues that start in South Korea, and pressure from activist investors Jana Partners, it launched what seemed like a yearlong review of its operations aimed at, well, who knows. Placating Jana, maybe?
What we do know is that the effort was for nothing, as QCOM management decided not to split its two business units, Qualcomm CDMA Technologies and Qualcomm Technology Licensing.
Investors hope the time, effort, and surely lots of money spent help to boost a sagging stock price. Motley Fool’s Ashraf Eassa provided a good outline of what QCOM hoped to achieve. His colleague, Leo Sun, is a bit more sanguine about QCOM, but even the notion he brings to the table of a dividend cut should leave investors chilled to the bone.
If you believe QCOM is undervalued, have at it….
Valeant Pharmaceuticals (VRX)
What started as a Citron Research report suggesting that Valeant (VRX) just might be the next Enron got downright ugly as the pharmaceutical company’s stock fell a jaw-dropping 30% in one day back in October.
Citron’s report came after The New York Times published an article concerning the practice of pharmaceutical companies buying competitors simply for their products, and bumping up the price of those products as soon as the purchase ink dries.
As long as eyes are focused squarely on the accusations and practices at Valeant, 2015’s 25% drop won’t get much better.
Surprisingly, after Valeant lowered revenue and earnings guidance last week, VRX stock went up.
Don’t be bamboozled, at least not until the smoke either blows over or begins to clear. After all, most investors aren’t like William Ackman, another blunder story for the year.
With Valeant one of its biggest holdings, Ackman’s Pershing Square Holdings had to weather a 24% drop in the value of its fund as VRX fell. What’s a billionaire investor to do? Put more money into Valeant, of course!
All in all, not the best of years for Mr. Ackman, with 2016 a question mark at this point, too.
Chipotle Mexican Grill (CMG)
And it’s still not over, as Boston College students recently got sick after eating at a local Chipotle.
CMG stock — among the biggest winners of the last five years with stock returns over 120% — got crushed on the news. Indeed, it fell to a year-to-date loss of just over 22% and a one-year loss of over 18%.
Of course it’s possible, if not likely, that Chipotle’s food woes are over. Let’s hope they’re at least under control.
If that’s the case, CMG stock is a possible bargain today.
But perception is reality these days, and as InvestorPlace’s John Devine points out, the business model is starting to crack. Public confidence in the health issue will take time to sort itself out and CMG’s fall may not be over quite yet.
Perhaps CMG’s bad luck isn’t confined to this year alone. Better to not take a chance.
Sure, you can eat the burritos or nachos, but that risk is on you.