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Friday, January 02, 2009
Market Winners & Losers: Dynegy, HCP
David O'Brien
FOXBusiness
The first day of the new trading year saw a late holiday gift, the Dow closed above 9000 for the first time since early November. The major indices closed up around 3% each not affect by the weaker-than-expected manufacturing numbers.
Here are some of the day’s winners and losers:
Winners
Dynegy Inc. (DYN)
Despite the energy company’s deal with LS Power Associates being dissolved, the stock climbed 38 cents, or 19%, to start the New Year closing at $2.38.
Office Depot (ODP)
News of credit restructuring with Citibank (C) for the retailer’s privately held credit card helped the stock jump 52 cents, or 17%, to end the week at $3.50.
Massey Energy (MEE)
Coal companies could be the big buy for the New Year. Many of the producers, including MEE, had been hurt by the year-end decline in commodity prices. The stock gained $2.40, or 17.4%, on the day to finish at $16.19.
Developers Diversified Realty Corp. (DDR)
The retailer advanced as it attempts to solidify its financial position with refinancing more than a billion dollars in loans and selling a large chunk of assets. The stock closed 80 cents, or 16%, higher at $5.68.
Starwood Hotels & Resorts Worldwide Inc. (HOT)
After signing a confidential property agreement with Sam Zell, the hotel and leisure company saw shares climb. HOT ended the trading day up $2.84, or 16%, to close at $20.74.
Losers
HCP Inc. (HCP)
Real estate operations were down on the day as the housing market has yet to show signs of reaching a bottom. HCP closed down $1.51, or 5.44%, on Friday at $26.26.
Equity Residential (EQR)
Another REIT that got the short end of the stick to start the New Year, EQR closed down $1.53, or 5.3%, to end the day at $28.23.
Public Storage (PSA)
A last-minute downturn erased much of the gains from the last day of trading in 2008 as it dropped $3.92, or nearly 5%, to $75.58.
Hudson City Bancorp Inc. (HCBK)
Low volume and a lack of faith in the savings & loan market continue to hamper Hudson City; as it continues its decline from November. Shares dropped 74 cents, or 4.6% on the day, to close at $15.22.
Plum Creek Timber Company Inc. (PCL)
With timber and timber-related products still trading down, PCL watched shares drop $1.32, or nearly 4% on Friday, to close the week at $33.42.
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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
