Value investors are primarily interested in the price of a
security, though they need to do additional research to determine
whether a cheap stock is a good investment. GuruFocus'
Guru Bargains screener
shows the Guru stocks that have declined the most since they were
purchased. The screener serves as a jumping-off point to get
investing ideas for further analysis. Some stocks whose prices
have nosedived may be quality companies facing a temporary
setback, and others may be value traps in permanent decline.
According to the Guru Bargains screener, these are the stocks
that have declined the most since Gurus purchased them: Zynga (
), Audience Inc. (
), Groupon (
), Education Management (
) and Progenics Pharmaceuticals (
Primecap Management more than doubled their holding of Zynga, a
social game developer which held its IPO in December, in the
second quarter, buying 118,350 shares at an average price of $8.
The price has dropped more than 61% since then, to a price of
$3.08 on Thursday.
After sliding several months, Zynga shares took a turn for the
worse in July when it lowered its fiscal 2012 guidance due to
"delays in launching new games, a faster decline in existing web
games due in part to a more challenging environment on the
Facebook web platform and reduced expectations for Draw
Something," according to Reuters.
Zynga revenue for the second quarter increased 19% year over
year, but for the six months of 2012, it has lost $108 million,
compared to net income of $18 million the prior year. The net
loss included $95.5 million of stock-based expense in the second
quarter. The company's bookings also fell to $302 million for the
second quarter, down from $329 million in the bookings in the
second quarter the prior year. After two quarters of positive
free cash flow, the company reported negative free cash flow of
$210 million in the second quarter.
Zynga's price is also down due to a plethora of insider sales
after lock-up periods expired this year. The float will be
comprised almost 90% by post-IPO lock up shares by the middle of
August, according to MarketWatch.
Audience Inc. (
Audience Inc. stock has fallen 65% since
bought in the second quarter. Cooperman purchased 421,065 of the
new holding at an average price of $19. Today the stock trades
Audience makes voice and audio processors for mobile products. It
has created earSmart intelligence voice processors, which have
"brain-like" technologies that enhance sound quality. The
company's market cap lost most of its value in September when it
updated its business outlook. It informed investors that Apple
would not likely be using its products in its next generation of
iPhone. The change would not impact its third fiscal quarter, but
would first affect financial results one quarter Apple begins
selling its new phones.
The company raised its guidance for its 2012 third quarter based
on its strong hardware shipments and forecast for the remainder
of the quarter.
Audience just went public in May at $17 per share, valuing it at
$330 million. Apple accounted for 37% of the company's total
revenue for the three and six months ended June 30, 2012. It had
partnered with Apple since August 2008.
Education Management (
Education Management's stock has declined 62% since
bought 177,000 shares in the second quarter at an average price
of $10. Its current price on Thursday is $3.52.
Education Management is a for-profit post-secondary education
company. It has been facing declining revenue from declining
student enrollment, influenced by a slew of increased or proposed
government regulations aimed at protecting students from saddling
themselves with overwhelming debt. Education Management's new
student enrollment for the three months ended June 30, 2012,
declined 20.1% from the same period the prior year. It also
posted a net loss of $1.5 billion, or $11.97 per share, in 2012,
compared to net income of $229.5 million, or $1.66 per share in
In August, the company was also sued by the Department of Justice
and four states, who believe the company fraudulently received
$11 billion in state and financial federal aid from July 2003
through June 2011. Education Management has denied any
Shares of Groupon declined 59% since
bought 300,000 shares at an average price of $11 in the second
quarter. The stock is currently trading at $4.59 on Thursday.
Groupon had a strong streak of growth for a period recently. The
number of active customers increased from 15.4 million in the
first quarter of 2011 to 36.9 million in the first quarter of
2012. In the same span of time, free cash flow increased
quarterly from $67 million to $310 million in the first quarter
of 2012. In the second quarter, the company's revenue increased
45% year over year to $568.3 million.
Competition in the daily deal business has become more intense as
the company lost market share in the second quarter, according to
Yipit, a site that tracks the daily deals space. Groupon's market
share shrank by 3 percentage points to 53%, its lowest level
since the fourth quarter of 2011. Competitor Living Social gained
2 percentage points, and Travelzoo gained one.
Groupon's market share loss resulted primarily from an estimated
2% decline in its daily deals. Most of its second-quarter sales
growth came from its Groupon Goods shopping site, which it
launched last year.
Progenics Pharmaceuticals (
Progenics Pharmaceuticals stock has declined 59% since Jim Simons
purchased 62,400 shares at an average price of $9 in the second
quarter. The stock is trading for $3.81 on Thursday. Simons' firm
is run largely through automated processes based on mathematical
Progenics is a biopharmaceutical company that develops treatments
for diseases such as cancer. Its
stock price fell the most this year in July, precipitated by news
that the FDA requested more clinical data
after reviewing its supplemental new drug application for
RELISTOR (methylnaltrexone bromide) injection for the treatment
of opioid-induced symptoms in adults with chronic, non-cancer
pain. The drug already has been approved for other uses in more
than 50 countries. Salix, the company it has partnered with on
the drug, is slated to meet with the FDA to discuss the results.
The company then reported a net loss of $10.7 million or $0.32
per share in the second quarter, compared to net income of $55.5
million or $1.64 per share in 2011, due to payments it had to
make on a collaboration with Salix. It was the company's fourth
consecutive quarter of losses. Revenue also declined to $1.8
million, from $74.4 million the prior year due to a decline in
reimbursement revenue from its Salix collaboration and lower
research grant revenue. It was offset by a $1.1 million increase
in royalty revenue.
To see more companies that have become drastically cheaper since
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