Friday Losers: Wimm-Bill-Dann Foods and HCP
Among the biggest losers in Friday’s early trading are Wimm-Bill-Dann Foods (NYSE: WBD) and HCP (NYSE: HCP).
| Top Percentage Losers — Friday, June 18, 2010 | ||||
| Company Name (Ticker) | Intra-Day Price | Intra-Day % Loss | 52-Week High | 52-Week Low |
| Wimm-Bill-Dann Foods (NYSE: WBD) | $19.67 | -8.9% | $78.57 | $12.33 |
| HCP (NYSE: HCP) | $32.74 | -4.7% | $34.50 | $19.65 |
| *Table includes companies with minimum market capitalizations of $200 million and three month trading volumes of at least 100,000 shares. All percentage returns are listed as of 1:48PM Eastern Standard Time. Click on ticker symbols for up-to-the-minute price quotes and percentage gain data. | ||||
Russian Dairy Jilted for Another
Pharmacy companies CVS Caremark (NYSE: CVS) and Walgreens (NYSE: WAG) kissed and made up last night. But that doesn’t seem to be the fate awaiting the dairy and baby food companies Wimm-Bill-Dann Foods (NYSE: WBD) and Danone.
#-ad_banner-#The French company Danone owns an 18% stake in Russia’s WBD. But this week Danone announced a merger with one of WBD’s competitors, Unimilk.
No one likes to learn that their partner is getting a little action on the side. And sometimes the best course of action is to go it alone. WBD announced today that it would be willing to buy back Danone’s share in the company. WBD is down -8.9% on the news.
Action to Take –> WBD had a strong first quarter, with sales up +19% over last year’s first quarter. But it will now be facing stronger competition. With its new partner, Danone will control an enviable 21% share of Russia’s dairy market. The share buyback may also hold back WBD’s expansion and acquisition plans. Any divorce is painful — but this one may also prove to be costly for WBD.
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Healthcare REIT Dilutes
Many income investors are attracted to the rich dividends and relative safety of healthcare real estate investment trusts (REITs). Healthcare properties tend to be solid cash producers with long, stable leases. But income investors will leave an investment in the dust if they think their dividend rate is at risk. Apparently, that’s why shares of healthcare REIT HCP (NYSE: HCP) are down -4.7% today.
Today, HCP issued 13.5 million new shares. The REIT has said it will use the nearly $450 million to help pay down its credit facility. While that will help shore up the balance sheet, it puts nearly +5% more shareholders in the cue for dividends.
Action to Take –> Even if HCP doesn’t have to drop its dividend, shareholders suspect they won’t be seeing a dividend increase any time soon. And that stings when a lot of other companies are increasing payouts right now. Target (NYSE: TGT) boosted its dividend by +47% this month. Del Monte Foods’ (NYSE: DLM) shareholders just got a +80% dividend pay raise.
But this may be a case of a little short-term pain for a longer-term gain. As long as HCP doesn’t have to go back to the dilution well any time soon, shareholders — and their dividends — should benefit from the debt reduction.