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5 Big Surprise Stock Losers of 2011 - views
MILLBURN, N.J. (Stockpickr) -- 2011 is drawing to a close. While both professionals and do-it-yourself investors try to prognosticate the year ahead in advance, we're always dealt our fair share of surprises -- both good and bad.
Research In Motion: -75.5%
The world of mobile telecommunications was exploding as we entered 2011. Smartphone usage was on the rise. The introduction of the Apple (AAPL) iPad launched another technological era, that of tablet devices.
All of the stars were lined up for Research In Motion (RIMM) to build off of its dominance in enterprise telephony to challenge Apple on both the smartphone and tablet wars. The battle lines were drawn.
But Research In Motion did not show up.
The company was unable to successfully transition its line of smartphones from corporate function to consumer fun. RIM's Playbook tablet was a flop, represented a small portion of its total sales and resulted in significant write-offs. Instead of an Apple-Research In Motion duopoly, smartphones using the Google (GOOG) Android operating system now compete head to head with the iPhone, and the tablet market, while dominated by the iPad, has other successful entrants such as Amazon’s (AMZN) Kindle line and Barnes & Noble’s (BKS) Nook.
Research In Motion might not survive 2012 as an independent company. My vote both in terms of my technology purchases and investment holdings remains with AAPL, though I also own Google.
RIM, which shows up on a recent list of 6 Tech Stocks to Avoid in 2012, was featured recently in "7 Extreme Stocks to Trade in This Volatile Market." Apple, on the other hand, shows up on a list of 13 Tech Stocks to Buy and was featured in "5 Stocks Hedge Funds Favor for 2012."
First Solar: -75.3%
Reduced reliance on fossil fuels and expansion of alternative energy, particularly solar energy, was a grand promise made by Barack Obama during his 2008 presidential run. However, as we have seen, solar energy is not all that it is cracked up to be.
The federal government gave tax breaks and over $500 million in loans to Solyndra, only to watch that company slip into bankruptcy. The entire industry is decaying before our eyes much like the dotcoms did a decade ago. First Solar (FSLR) is off over 75% so far this year.
For another take on First Solar, one of the 10 worst-performing S&P 500 stocks of 2011, check out Best Growth Stocks for 2012. (The stock also appears on a recent list of 5 Stocks JPMorgan Warns to Absolutely Avoid.)
The office supply business overall had a poor year in 2011. Staples (SPLS), the largest player in this specialty sector, declined 38.8% so far this year. Second banana Office Depot (ODP) declined 60.4% in the same period, and Office Max (OMX) is off 75.7%.
So what is happening to the entire sector? Growth has slowed down to single digits for Staples and has run negative for the other two smaller competitors. Thanks to an intransigent Washington, small company creation and resultant job creation is small. Many people are starting business at home using existing equipment and supplies.
Office Max shows up on a list of 10 Retail Stock Losers of 2011.
I came into 2011 with long positions in Rovi (ROVI) stock but stopped myself out in the summer for a small loss. The thesis was that the company had an edge in the digital entertainment and graphics technology. Rovi had made some strategic acquisitions, such as Sonic, that would help to build its competitive edge.
As it turned out, Rovi was able to grow revenue and earnings this year. The company bested analysts’ estimates in each of the first three quarters of the year. However, a third-quarter revenue shortfall and disappointing forward guidance sent the shares tumbling in November.
Questions about the company’s ability to grow in the digital set-top box and interactive programming space spooked investors. The sudden crash in shares of digital entertainment giant Netflix (NFLX) did not help the digital entertainment industry and leaves an uncertain future for companies such as Rovi, Netflix and TiVo (TIVO).
For another take on Rovi, check out 13 Tech Stocks to Buy in 2012.
Ford Motor (F) was the only America automobile manufacturer to survive the financial crisis without government aid and remained an independent company. The company’s balance sheet, while not investment grade, was not in tatters and has steadily improved over the last three years. Just recently, the board of directors reinstated the company’s dividend.
So why is the stock down by 37% in 2011 despite solid earnings and revenues? In one word: Europe. Despite Ford's delivering good sales in Europe for 2011, concerns that the continent’s financial crisis and likely recession will greatly impact 2012 sales have weighed on the stock.
I was fortunate enough to make some decent money on Ford in 2010. In 2011, I repurchased Ford Warrants (F/WS) but have not fared as well on that last round of purchases. I am going to stick with my positions as I am confident that an improving economy in the U.S. and economic solutions in Europe will result in better-than-expected results.
-- Written by Scott Rothbort in Millburn, N.J.
At the time of publication, author was long Ford Warrants, Google, Amazon and Apple.
Scott Rothbort has over 25 years of experience in the financial services industry. He is the founder and president of LakeView Asset Management, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of TheFinanceProfessor.com, an educational social networking site, and publisher of The LakeView Restaurant & Food Chain Report. Rothbort is also a professor of finance at Seton Hall University's Stillman School of Business.