The profit-takers remained in charge on Tuesday, sending the S&P 500 1.01% lower to a close of 2045.17. The news-dependent bulls once again just had too little to latch onto, and last week’s failed bump into some key technical resistance was still the overarching concern working against the market.
It could have been worse, though, and for owners of Allergan plc Ordinary Shares (NYSE:AGN), Baker Hughes Incorporated (NYSE:BHI) and GoDaddy Inc (NYSE:GDDY), it was worse. These three names lost more than their fair share of ground during today’s trading.
Here’s what investors need to know about these setbacks.
Allergan plc Ordinary Shares (AGN)
In what had to be the biggest news item of the day, Allergan plc shares lost a whopping 15% of their value on Tuesday when the U.S. Treasury Department squelched an impending merger between the Dublin-based pharmaceutical company and U.S.-based Pfizer Inc. (NYSE:PFE).
The proposed and planned union of AGN and PFE was another one of what would have been a long string of so-called tax inversions, which U.S. companies use as a means of legally (though not physically) relocating overseas where corporate tax rates are generally lower.
Up until yesterday, tax inversions — though arguably a loophole — were legal, and fiscally beneficial. The pairing of Pfizer and Allergan was going to be no different. But, yesterday afternoon, the U.S. Department of Treasury established rules that make it difficult and fruitless to do such deals.
AGN shareholders had been particularly stoked about the pairing, setting up today’s sharp pullback.
Baker Hughes Incorporated (BHI)
Although crude oil prices were on the fence today, in the shadow of a 14% pullback over the course of the past couple of weeks, it comes as no real surprise that energy company Baker Hughes saw BHI lose more than 5% of its value on Tuesday.
However, it wasn’t weak oil prices that up-ended BHI today. The culprit was reports that the Department of Justice was moving to block the merger of Baker Hughes and Halliburton Company (NYSE:HAL) that was first announced back in late 2014.
The deal had been on thin ice for weeks, prompting BHI to offer the sale of a wide swath of assets to appease regulators. The DoJ wasn’t swayed, however.
GoDaddy Inc (GDDY)
Last, but not least, website hosting and registration outfit GoDaddy also took one on the chin Tuesday, falling more than 7% by the time the closing bell rang.
The prod for the pullback from GDDY was the announcement that a handful of major institutional shareholders — Silver Lake Partners and KKR & Co. L.P. (NYSE:KKR), to name a couple — were planning to sell a significant portion of their stake in the company.
All told, 16.5 million shares of GDDY will be sold, diluting the current float of 13.5 million. Aside from more than doubling the float, which puts downward pressure on the stock’s price, GoDaddy won’t even be pocketing any of the proceeds from the sale of those GDDY shares.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
