Among the biggest losers in Friday’s early trading are Core Logic (Nasdaq: CLGX), Elan (NYSE: ELN) and Buckeye Partners (NYSE: BPL).

More Fallout from the Housing Bubble

Shares of CoreLogic (Nasdaq: CLGX) are falling for the sixth straight session, down another -2% on Friday. The company, which was recently spun off from First American Financial (NYSE: FAF), is being investigated by New York state attorney general Andrew Cuomo for possible fraud. CoreLogic allegedly worked with mortgage lenders to provide inflated real estate appraisals to enable borrowers to squeak by lending standards.

#-ad_banner-#On the one hand, the lawsuit may be hard to prove, as home prices were inflated everywhere and appraisers could have simply cited nearby home sales that were at equally inflated levels. But CoreLogic’s appraisers may have offered estimates above those already-inflated levels.

If this suit succeeds, look out below. The flood gates could be opened for many other states where appraisals were possibly inflated. And homeowners could conceivably step up to sue the company as well to re-capture their lost money when houses were subsequently foreclosed.

Action to Take –> As the investigation drags on, shares could fall even more as shorts pile on. But keep an eye on proceedings. If the New York AG decides not to take action, then investors will quickly re-warm to this very cheap stock. Shares trade for less than 8 times next year’s profits. And profit growth could be robust in subsequent years as housing activity stars to pick up, boosting demand for appraisal services.

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Elan awaits the FDA

Shares of Elan (NYSE: ELN) have been falling sharply in recent weeks, and are down another -3% on Friday, as the Food and Drug Administration gets set to weigh in on a rival’s new drug application. Novartis (NYSE: NVS) hopes to gain approval for an oral dosing of a drug treatment for multiple scleroris. Elan and partner Biogen Idec (Nasdaq: BIIB) are one of several drug firms with existing MS drugs on the market. Only Elan counts on the MS drug for the majority of revenue, and has the most to lose if Novartis’ drug is approved.

FDA approval, though, is an open question. Novartis’ orally administered drug may be preferential to the injectable rivals, but it also carries some side effects that typically spook regulators. In the past, the FDA would provide tentative approval to such drugs with the caveat that all patients be closely monitored for the first few years. These days, the FDA is more likely to reject such a drug outright.

Action to Take –> If the FDA denies Novartis’ bid, then shares of Elan could post a powerful relief rally. If the FDA grants approval with restrictions, then shares may still move back up as Elan’s Tsybari would likely remain the market leader. If shares fall much further, they should be bought regardless of the FDA ruling, as Novartis is unlikely to have the market all to itself, and Elan will still retain decent market share.

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Buckeye’s Bad Math

In a bid to simplify a complex partnership, Buckeye Partners (NYSE: BPL), an oil and gas transmission firm, is set to merge with Buckeye Holdings (NYSE: BGH), its parent holding company. BPL will issue shares to BGH to complete the deal. Buckeye Holdings has picked up $163 million in market value on Friday, while shares of Buckeye Partners are down $122 million. The $41 million discrepancy is explained away by perceived synergies. Those “synergies” are actually the amount that insiders pocketed to oversee the twin-headed hydra known as Buckeye.

Many other oil and gas master limited partnerships (MLPs) have a similar two-headed structure, which rarely seem to exist for the benefit of outside investors.

Action to Take –> Score one for the little guy. This deal should set an example for other MLPs.