Among the biggest losers in Friday's early trading are
Core Logic (Nasdaq: CLGX)
,
Elan (
ELN
)
and
Buckeye Partners (
BPL
)
.
|
Top Percentage Losers -- Friday, June 11,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
Buckeye Partners
(
BPL
) |
$55.65 |
-4.3
%
|
$62.39 |
$39.86 |
| Elan (
ELN
) |
$5.13 |
-2.8
%
|
$8.59 |
$4.61 |
| CoreLogic (Nasdaq: CLGX) |
$18.58 |
-1.7%
|
$37.42 |
$17.83 |
|
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 12:17PM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
More Fallout from the Housing Bubble
Shares of
CoreLogic (Nasdaq: CLGX)
are falling for the sixth straight session, down another -2% on
Friday. The company, which was recently spun off from
First American Financial (
FAF
)
, is being investigated by New York state attorney general Andrew
Cuomo for possible fraud. CoreLogic allegedly worked with mortgage
lenders to provide inflated real estate appraisals to enable
borrowers to squeak by lending standards.
On the one hand, the lawsuit may be hard to prove, as home prices
were inflated everywhere and appraisers could have simply cited
nearby home sales that were at equally inflated levels. But
CoreLogic's appraisers may have offered estimates above those
already-inflated levels.
If this suit succeeds, look out below. The flood gates could be
opened for many other states where appraisals were possibly
inflated. And homeowners could conceivably step up to sue the
company as well to re-capture their lost money when houses were
subsequently foreclosed.
Action to Take -->
As the investigation drags on, shares could fall even more as
shorts pile on. But keep an eye on proceedings. If the New York AG
decides not to take action, then investors will quickly re-warm to
this very cheap stock. Shares trade for less than 8 times next
year's profits. And profit growth could be robust in subsequent
years as housing activity stars to pick up, boosting demand for
appraisal services.
-------------------------------------
Elan awaits the FDA
Shares of
Elan (
ELN
)
have been falling sharply in recent weeks, and are down another -3%
on Friday, as the Food and Drug Administration gets set to weigh in
on a rival's new drug application.
Novartis (
NVS
)
hopes to gain approval for an oral dosing of a drug treatment for
multiple scleroris. Elan and partner
Biogen Idec (Nasdaq: BIIB)
are one of several drug firms with existing MS drugs on the market.
Only Elan counts on the MS drug for the majority of revenue, and
has the most to lose if Novartis' drug is approved.
FDA approval, though, is an open question. Novartis' orally
administered drug may be preferential to the injectable rivals, but
it also carries some side effects that typically spook regulators.
In the past, the FDA would provide tentative approval to such drugs
with the caveat that all patients be closely monitored for the
first few years. These days, the FDA is more likely to reject such
a drug outright.
Action to Take -->
If the FDA denies Novartis' bid, then shares of Elan could post a
powerful relief rally. If the FDA grants approval with
restrictions, then shares may still move back up as Elan's Tsybari
would likely remain the market leader. If shares fall much further,
they should be bought regardless of the FDA ruling, as Novartis is
unlikely to have the market all to itself, and Elan will still
retain decent market share .
-------------------------------------
Buckeye's Bad Math
In a bid to simplify a complex partnership ,
Buckeye Partners (
BPL
)
, an oil and gas transmission firm, is set to merge with
Buckeye Holdings (
BGH
)
, its parent holding company. BPL will issue shares to BGH to
complete the deal. Buckeye Holdings has picked up $163 million in
market value on Friday, while shares of Buckeye Partners are down
$122 million. The $41 million discrepancy is explained away by
perceived synergies. Those "synergies" are actually the amount that
insiders pocketed to oversee the twin-headed hydra known as
Buckeye.
Many other oil and gas master limited partnerships (MLPs) have a
similar two-headed structure, which rarely seem to exist for the
benefit of outside investors.
Action to Take -->
Score one for the little guy. This deal should set an example for
other MLPs.
-- David Sterman
Staff Writer
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.