I recently took a look at a few stocks that have performed well despite extreme market volatility and uncertainty. Then I wondered, "Which stocks have collapsed under the pressure of severe economic headwinds?" Now it's time to take a look at some of the biggest losers so far in 2011.
Citigroup
Citigroup (C) has fared the worst, down almost 37% year-to-date. In May the company executed a 10-for-1 reverse stock split in the hopes that Mutual Fund managers would now add the stock to their portfolio because many funds cannot buy stocks trading under $5 per share. History has shown that most reverse stock splits do not work and this one is no exception. Some well-known fund managers have trimmed their holdings of this stock, including George Soros and John Paulson. Instead, these two fund managers as well as Warren Buffett have moved funds into Wells Fargo (WFC). It's very difficult to quantify the greatest set of mortgage liabilities or loss exposures for Citigroup. Until this picture clears up, this stock is persona non grata in my view.
General Motors
Even with a fresh start, General Motors (GM) is leaning into a stiff headwind. At a recent price of $25.75 the stock is down 30.1 percent year-to-date. Operating in the consumer discretionary sector means that General Motors results are going to closely match the business cycle. With a recession looming and its global market share roughly the same as in 2009, I find no compelling reason to even think about owning this stock before the economy hits its next recessionary bottom.
Hewlett-Packard
Hewlett-Packard's (HPQ) business has many troubles, among them Apple's (AAPL) continuing dominance of the tablet business and the subsequent decline in demand for laptop PCs. The stock is down 23.2 percent based on a recent price of $32.32. The stock has a dividend yield of 1.5 percent and that may give the stock some cover in this low-interest rate environment. However, the company has more problems, like Oracle's (ORCL) decision to no longer support HP hardware using Intel's (INTC) Itanium chip. This will have a huge negative impact on its business if HP loses the lawsuit it filed against Oracle in June. Last but perhaps not least, Hewlett-Packard is simply not in vogue as tech buyers are looking for an accessory as well as functionality.
While the market has struggled this year, these stocks have simply stunk up the joint. With a global recession looming it would be wise to look elsewhere.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
