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Friday, December 19, 2008
Market Winners & Losers: GM, Tenet Healthcare
David O'Brien
FOXBusiness
The major indices remained relatively flat to end the week after a huge swing to the upside Friday morning, with news that General Motors (GM) and Chrysler will receive more than $17 billion from the government. As oil settled at $33 on the last day with January as the front-month contract, here are some of the day’s winners and losers.
Winners
General Motors Corp. (GM)
The big winner from the auto bailout, GM is set to receive billions to try to revamp sales and avoid bankruptcy. The auto maker saw shares rise 83 cents, or nearly 23%, to close at $4.49.
Darden Restaurants Inc. (DRI)
The Red Lobster and Olive Garden owner shocked investors as it saw November a big rise in sales, despite a less-than-favorable forecast from analysts. The stock gained nearly 20% Friday, up $4.74 to $28.72.
Micron Technology Inc. (MU)
The semiconductor producer cheered news that Hynix Semiconductor Inc. is cutting production as demand continues to slide. Shares rose 14.5%, or 38 cents, on Friday to end the week at $2.99.
LSI Corp. (LSI)
After lowering fourth-quarter guidance, the stock responded positively, gaining 44 cents, or 12.8%, to end the week at $3.88.
Office Depot Inc. (ODP)
A bright spot for the office supplies retailer; maybe some people needed pens for Christmas. The stock increased 29 cents, or 13.6%, to $2.79 on nearly 8.8 million shares traded.
Losers
Cintas Corp. (CTAS)
After releasing poor quarterly numbers Friday morning, the stock dropped significantly and failed to recover. It closed down $3.19, or 12.5%, to end the week at $22.35.
Weyerhaeuser Co. (WY)
An apparent cutback in use of timber and timber-related products has hit WY, which lost $3.51, or 9.45% on the day to close at $33.62.
M&T Bank Corp. (MTB)
Apparently the company’s acquisition of Provident Bankshares Corporation is not impressing people, as shares fell $3.76, or 6.3%, to end the week at $55.96.
Tenet Healthcare Corp. (THC)
The health-care facilities provider had news that it was cutting jobs in South Carolina, and the issues in that state can be felt across the country as growing economic pressures have hampered the company throughout much of the last quarter. The stock fell 6%, or seven cents, to $1.06.
Fluor Corp (FLR)
Citigroup lowered the company’s rating to sell, which didn’t help the stock -- it lost nearly 6%, or $2.79, to close at $45.26.
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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.
