Playing the stock market is no game, as any seasoned investor will tell you. While some companies seem to have the magic touch and regularly trade at above-average price-to-earnings multiples, others have been a major disappointment to shareholders and significantly underperformed the market over the past decade. Let’s take a look at some of the stocks you definitely did not want in your portfolio, unless of course you were shorting them or your goal was to maximize your capital losses. Here are the 10 worst performing stocks of the past decade.
1. Eastman Kodak Company
For 131-years, Eastman Kodak was a pioneer in the world of film and imaging. Unfortunately, an increasingly digital world meant bad news for the company and its shareholders. The company reported just one profitable year since 2004 and was finally driven into bankruptcy in 2012. Kodak stock was delisted from the New York stock exchange, leaving shareholders holding EK stock with canceled shares. USA Today announced Eastman Kodak’s triumphant return to the stock exchange in October of 2013, but the 99.89 percent decline in the value of company shares over the past decade still earns this company a top place on the list of the decade’s worst performing stocks.
2. YRC Worldwide
YRC Worldwide (NASDAQ:YRCW) is the holding company for a lot of brands you may not know by name that ship a bulk of the retail goods you use every day. YRC Worldwide Inc. is a Kansas-based company with a vast network throughout the United States. The company ships residential industrial and commercial goods, but it wasn’t this transportation activity that got YRC Worldwide Inc. into trouble. Instead, YRC was nearly taken down by liquidity problems after making several major acquisitions.
In 2003, it acquired Roadway Corp. and in 2005 purchased half of JHJ International Transportation Co. Ltd. and 65 percent of Jiayu Logistics Co. YRC was drowning in debt when the recession hit and shipping volumes dramatically declined. Bankruptcy looked imminent, but shareholders kept the company alive by exchanging $500 million of debt for equity. Unfortunately, YRC’s stocks have since performed extremely poorly and these shareholders may have made a bad deal in light of continuing concerns about the company’s solvency. Buyers who purchased and held the stock over the past decade definitely didn’t make a wise buy, since YRC Worldwide shares have lost 99.89 percent of their value between January 2004 and January 2014.
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3. AIG
American International Group (NYSE:AIG) was taken down in a highly public way by its involvement with the subprime mortgage market. AIG got into trouble when the company entered into credit default swaps, which insured $441 billion worth of mortgage-backed securities. Although these securities carried the coveted AAA rating, it turned out that they weren’t such a good credit risk after all.
Like two other poor performers on this list — Fannie Mae and Freddie Mac — AIG received a government bailout from Uncle Sam. The Wall Street Journal reported that the loan was to the tune of $85 billion and that it gave the U.S. government a 79.9 percent equity stake in the insurer. While the influx of money prevented the collapse of the company, it did not prevent the collapse of AIG’s stock price. Over ten years, from January 2004 to January 2014, AIG shares plummeted and lost 96.26 percent of their value.
4. Fannie Mae
Fannie Mae holds the dubious honor of being near the top of any list of the most poorly performing stocks over the past ten years. Fannie Mae had more exposure to the collapse of the residential mortgage market in summer of 2008 than almost any other stock sold on the exchange. This government-sponsored enterprise, along with its sister company Freddie Mac, was involved in around half of the American mortgage industry, playing the role of both purchaser of residential loans and seller of securities.
Some argue that Fannie Mae actually perpetuated the subprime mortgage crisis by yielding to congressional pressure to provide mortgage loans in distressed inner city neighborhoods. Regardless of whether this is true, what is clear is that Fannie Mae took 70 years to build and collapsed in only a matter of months. Billions of dollars in losses prompted the government to move Fannie Mae into conservatorship, and as Morning Star reports, from January 1, 2004 through January 14, 2014, Fannie Mae stock lost 95.83 percent of its value.
5. Great Atlantic Pacific & Tea
This is a company that you probably know as A&P, and it is the country’s oldest grocer. A&P once had thousands of stores and was an industry leader that pioneered the idea of selling store-branded products. Unfortunately, supply chain issues, a large debt load, liquidity problems, and involvement with around 12 pension funds with $300 million in underfunded liabilities all came together to force this company into bankruptcy in 2010.
The bankruptcy didn’t come as a surprise to Food World, which wrote that the company’s bankruptcy was decades in the making thanks to poor performance, numerous management changes and poor quality store conditions. Shareholders, however, may have been surprised that the company stock performed so poorly it lost 95.75 percent of its value over the past decade.
6. JDSU
JDS Uniphase Corporation (NASDAQ:JDSU) provides communications test and measurement solutions. Formed in 2005 when two fiber-optics companies merged, JDSU designs lasers, test measurement equipment, optical authentication solutions and custom optics equipment. Once a tech-darling, the company’s stock price doubled three times in the 1990s and the stock continued to perform well into the early 2000’s. Unfortunately, excess spending on mergers and acquisitions and a massive drop in employment because of the Global Realignment Program resulted in the stock price tumbling.
Things got so bad, JDSU was sued by the state of Connecticut after the tech collapse of 2001 (although The Wall Street Journal reports that the company won.) The company remains way down from its one-time highs and the value of a share of stock declined 95.53 percent over the past decade, including the impact of a reverse stock split in 2005.
7. Freddie Mac
Freddie Mac is a smaller sister company to Fannie Mae, although it isn’t that small since the company lost in excess of $50 billion in 2008 alone. Like Fannie Mae, Freddie Mac was heavily involved in the residential mortgage market and owned or guaranteed millions of dollars in bad loans that went into default.
Although they are publicly traded companies, both Fannie Mae and Freddie Mac were subject to what CNN Money called an “extraordinary takeover” in 2008. The GSAs received around $180 billion from the U.S. treasury and the U.S. government took a new class of “senior preferred” shares in exchange. Shareholders, with their newly diluted stock, found themselves dismayed as Freddie traded around the $1 range before being delisted from the New York Stock Exchange in 2010. While the loans are being repaid and earnings are improving for Freddie (and for Fannie), Google Finance reports that the company shares lost 94.85 percent of their value over the past decade.
8. Citigroup
Like many of the stocks on this list of poor performers, Citibank (NYSE:C) stock shares fell dramatically because of the big bank’s involvement with the subprime mortgage mess. Citibank joins AIG, Fannie Mae, and Freddie Mac on the list of companies that were bailed out by the federal government to avoid bankruptcy (Eastman Kodak likely would have appreciated a bailout too, but alas a film company isn’t too big to fail.)
Even with $45 billion of help from the government, Citibank has not performed well. Compounding the bank’s problems are a history of mismanagement (the Huffington Post published an article in 2010 discussing the possibility of CEO Chuck Prince running the bank into the ground) and an inability to coordinate the bank’s operations spread across 100 countries when Sandy Weill left in 2003. Thanks to all the problems, the stock has experienced an 89.19 percent decline from January 2004 to January 2014.
9. ETRADE Financial Corporation
You’d think a brokerage firm would perform a little better, but E*Trade (NASDAQ:ETFC) is yet another company on the list that got into trouble due to the subprime mortgage mess. Noticing a trend here?
The company had a $3 billion asset-backed securities portfolio and ended up selling the securitized subprime mortgages to Citadel for just $800 million in cash. The net reduction of $2.2 billion in assets on the company’s balance sheet sent stock prices plummeting although it also removed the risk from the subprime investments. ETrade stock hasn’t fully recovered and the company still shows a 84.22 percent decline in the value of its share price from 2004 to 2014 according to Google Finance.
10. Unisys Corporation
This worldwide IT company has a long history in the technology industry and provides software and technology solutions. Unfortunately, Unisys (NYSE:UIS) has also been in a lot of trouble in the past decade. From involvement with lobbyist Jack Abramoff (to the tune of $640,000), to overbilling the Transportation Security Administration by around 171,000 hours according to the Washington Post the company has had its share of political problems. In 2007, it was also found guilty of both trademark infringement and misrepresentation of retiree benefits. All of this was bad news for the stock price and for shareholders, as a share of the company stock lost 78.01 percent of its value over the past ten years.
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