With Thanksgiving here, I thought it would be an appropriate time to look at the biggest turkeys in the stock market this year. The following list contains some of the biggest and well-known duds this year. To little surprise, many are from the financial sector (NYSEARCA:XLF).
Bank of America (NYSE:BAC) seems to make headlines every other week due to problems at the battered bank. After denying capital concerns, the bank sold its China Construction stake, raised $5 billion from Warren Buffett, and even tried to charge customers a monthly $5 debit fee. Last month, BofA moved up to $53 trillion in derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits. Translation, when the derivatives timer goes off, this is one turkey that is going to leave a mess for taxpayers. Shares have fallen 60% year-to-date. Other financial turkeys include: Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), JP Morgan (NYSE:JPM), and Jefferies Group, Inc. (NYSE:JEF).
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Some turkeys are ruined before they even make it to the dinner table. In the case of MF Global, shares did not even make it to November. On Halloween, the futures broker filed for Chapter 11. Within a day, it was made aware that the company was not in compliance with the CFTC and CME (NASDAQ:CME) in regards to customer segregation requirements. After refusing to disclose information to regulators, CEO Jon Corzine admitted to using client money as its financial troubles mounted. The former Goldman Sachs (NYSE:GS) CEO managed to run MF Global into the ground after taking the reigns of the company in March 2010. Leverage not only gave birth to the housing and credit bubble, but also brought down MF Global as the firm and its CEO apparently learned nothing over the past few years. Eric Lewis, a specialists in international insolvency cases explains, “For every dollar of its own capital on its books, it had borrowed $40, a leverage even greater than that of Lehman Brothers at the time of its collapse.”
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One of the biggest turkeys of the year is Eastman Kodak Co (NYSE:EK). Shares have plummeted nearly 80% year-to-date. Investors have raised bankruptcy fears in recent months after the company tapped used $160 million of its credit line. More recently, the company reported a $222 million (83 cents per share) loss for the third quarter, compared to a $43 million loss in the same quarter last year. The company has now missed analyst estimates for the last four quarters. Competitors such as Canon Inc. (NYSE:CAJ) and Sony (NYSE:SNE) have fallen 19% and 54%, respectively.
Another stock down nearly 80% this year due to bankruptcy rumors is American Airlines Corp (NYSE:AMR). In addition to bankruptcy rumors, the airliner continues to struggle in negotiation talks with the pilots union. AMR Corporation operates an airline that provides scheduled passenger, freight, and mail service throughout North America, the Caribbean, Latin America, Europe, and the Pacific. The Company also provides connecting service throughout the United States, Canada, and the Caribbean. Competitors include: Southwest Airlines (NYSE:LUV), United Continental Holdings (NYSE:UAL), and JetBlue Airways (NASDAQ:JBLU).
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