It was a choppy, lethargic effort, but the bulls got the job done. The S&P 500‘s close of 2,262.53 was 0.20% stronger than Friday’s close. New record highs still remain elusive after last week’s lull, but those levels are still in sight.
Not every stock mustered a modest gain on Monday though. In fact, some were remarkably deep on the red. Among the worst of the worst were Ambac Financial Group, Inc. (NASDAQ:AMBC), Deutsche Bank AG (USA) (NYSE:DB) and Mosaic Co (NYSE:MOS). Here’s what upended each one.
Mosaic Co (MOS)
Brazilian iron company Vale SA (ADR) (NYSE:VALE) is getting out of the fertilizer business, and U.S.-based fertilizer name Mosaic is getting a bit deeper into it, buying the division Vale is shedding. With VALE shares down 5.4% and MOS stock off by 6% though, it’s pretty clear neither shareholder base is thrilled with the deal, or its terms.
The deal, worth $2.5 billion in total, will consist of a $1.25 billion cash payment, and 42.3 million shares of MOS. Mosaic will take on new debt to fund the cash portion of the purchase.
The agreement will provide some much-needed cash to struggling Vale, though shareholders may be concerned that half of the deal is being funded with a wobbly MOS stock. Meanwhile, Mosaic shareholders may be concerned that Brazil’s economic rebound that could support better fertilizer prices is equally wobbly.
The broad weakness in materials stocks on Monday certainly didn’t help matters.
Deutsche Bank AG (USA) (DB)
Deutsche Bank knew it was coming sooner or later, one way or another. But, the glimmer of hope some DB shareholders were holding onto that the bank had an ace up its sleeve was extinguished today. Deutsche Bank is going to settle with the United States Department of Justice, though likely for an amount considerably less than the $14 billion the DoJ is asking for.
The payment should bring an end to a decision made in September, although the matter itself extends all the way back to 2008. That’s when the Department of Justice says the German investment bank improperly sold mortgage-related securities. The punishment of a $14 billion wasn’t decided until three months ago, however.
Deutsche Bank initially resisted, but has now resigned to such a fine rather than mounting a legal battle to fight it. The size of the actual payment the bank reportedly intends to make has not yet been disclosed, but it looks like some sort of sizeable payment in coming, likely this week.
DB ended the day down nearly 4%. Fanning those bearish flames was a group-wide pullback from foreign bank stocks, which have become a little overextended over the course of the last few days.
Ambac Financial Group, Inc. (AMBC)
Finally, although they soared in November and did pretty well during the first half of December, shares of Ambac Financial Group were torpedoed today. AMBC ended the day down 15.4% after MKM Partners downgraded the stock on a lack of clarity as to its actual value.
The firm said it’s found “great difficulties assessing an appropriate value,” but noted that based on what it can deduce about its adjusted book value, AMBC is worth something closer to $10 per share.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.