Please do not Read if Superstitious
Andrew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Superstition is an intriguing topic. There are countless beliefs that people hold that all have varying degree of meaning and interpretation. Superstitions such as a bird in the house is a sign of death, a horseshoe hung in the bedroom will keep bad dreams away and never light three cigarettes with the same match are beliefs that may be a bit extreme, but there are other superstitions that are so ingrained in society they are borderline factual beliefs. The phrase “If March comes in like a lion it will leave like a lamb” is an example of one such belief. If you have followed the news recently about the recent tornadoes in Missouri, Illinois, Tennessee and Wisconsin, March has definitely come in like a lion. Like the weather in these states, several stocks started March off like a lion, and here is why I think they are going to go out like a lamb.
First off, the phrase “in like a lion” typically is used to describe a bad event, a la the tornadoes and snow storms. For this article I am going to change that meaning to signify a stock that had significant gains to start out March.
One of the biggest percentage gainers from yesterday is Monster Worldwide (NYSE: MWW). Monster ended the trading day up over 15% after CEO Salvatore Innuzzi announced Monster was considering “strategic alternatives to improve shareholder value.” So, on that whimsical promise, investors poured money into Monster, refusing to view the Mr. Innuzzi’s comments for what they are -- a short-term ploy to satisfy investors (91% of who are of the institutional type) and keep them from abandoning ship. Haven’t we seen this story before from Monster? Back in 2007-2008, in an effort to reduce costs and improve shareholder value, Monster cut 15% of its full-time staff. If Monster relapses and revisits its old strategy in this most recent attempt, it may end up causing more damage than good. That is why Monster may go out like a lamb.
Gap (NYSE: GPS) rose over 7% yesterday on news that same store sales saw an unexpected rise in February. Generally, an increase in same store sales is an indication that the economy is improving and people are willing to spend more money. It now appears that this most recent news will have little impact on the share price going forward as the price is already down almost 2% as of this article and investors remembered that the Gap has had negative revenue and earnings growth over the past twelve months.
Clear Channel Outdoor (NYSE: CCO) rose almost 8% on an announcement that they were issuing a special dividend of $6.08 per share for a total of $2.2 billion. This dividend is payable to shareholders with an ex-dividend date of 3/8/2012 to be paid on 3/15/2012. This special dividend should drive investors to purchase CCO up to the ex-dividend date, but after that investors can continue to monitor Clear Channel’s sizable debt load of over $2 billion and razor-thin profit margin of just over 1%.
Whether you believe you will have seven years bad luck for breaking a mirror, or a black cat crossing the road in front of you, superstitions are a strong part of a culture. Even investing has superstitions (remember the whole “if an original NFL team wins, stocks will rise thing?” BTW, nice job Giants). There is no rhyme or reason for people believing in the things that they do, but that is how many people perceive superstitions, and if perception is reality then these companies may be in for roller coaster March.
The Motley Fool owns shares of Gap. dillarda has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.