Without further ado, here is the rest of my list of dependably wretched performers with seemingly oblivious management teams. Please see part one of this piece for my thoughts on the first five disappointers I named -- Abercrombie & Fitch (ANF), ADT (ADT), Avon (AVP), BlackBerry (BBRY) and Broadcom (BRCM).
6. Caterpillar (CAT) -- Does anyone on the board of directors care the company spent $700 million for what looks to be a phantom company? Does anyone on the board care that Caterpillar paid $700 million for ERA Mining and then wrote off $580 million of it almost immediately? Are they happy with CEO Doug Oberhelman because there's still $120 million in value there? Maybe they will give him the Congressional Medal of Chinese Investing? What's amazing is that Caterpillar is a fabulous company, but its underperformance is so palpable that you would think something has to be done here. Yet nothing will be done, because Caterpillar is only tough when it comes to labor. When you ask anyone in business about who they can't believe still has a job, it's Oberhelman. Someone has to pay the price -- might as well be the shareholders.
7. Deere (DE) -- How, during what has arguably been the greatest run-up in agricultural commodity history, has this stock done nothing? Think about that ag complex. You have prices that went through the roof. You have the U.S. government basically paying farmers exorbitant amounts to grow corn so we can burn it with a fuel that no one wants. Yet somehow the stock of this principal-farm-equipment company does nothing? In conference call after conference call, it always seems management is identifying one division or one market that has pulled the whole company's stock down. How is that possible? Deere, like Caterpillar, makes the best machinery in the world. However, it is living proof that the best machinery means absolutely nothing when it comes to the shareholders.
8. Devon (DVN) -- Here's a company that decided to move as aggressively as it could out of the oil business, selling $7 billion in premier oil assets, so it could be more of a natural-gas and natural-gas-liquids play. No wonder its stock has done nothing for years and years while rival EOG (EOG) has shuttered nat-gas assets and has gone all in for oil. That's how Devon has declined 10 points, falling from $68 to $58 in the last three years, while EOG has doubled. Now Devon says it is trying to get more oily, but can it? I am waiting for Devon to go in and sell all of its nat gas assets down here, and try to buy some oil properties. At that exact moment, I would short oil until the cows came home and go all in nat gas. This company is a walking poison pill.
9. Merck (MRK) -- can these guys get a little bold, at least? Can they even attempt to bring out shareholder value? Did they get anything at all from that Schering-Plough merger? Was there any gain there? What the heck is going on at this company that it seems, with everything they try, they can no longer pull anything off? Also, why the heck did they hire the chief scientist of Amgen (AMGN), of all places, when they got rid of the previous underperformer? Amgen? That's about the only biotech that hasn't produced anything new in years, hence that company's acquisition of Onyx. How could Merck be so obtuse? I kept thinking they Merck have to do something to bring out value -- perhaps split up the company and sell is animal-health division, like Pfizer (PFE) did. One day they will. But Merck may actually be the only major pharmaceutical company that's doing nothing at all to create value. Maybe it's anti-value-creation? One day value will be unlocked, but it is discouraging, and the Action Alerts PLUS charitable trust finally threw in the towel on this one.
10. Oracle (ORCL) -- I'm so glad that CEO Larry Ellison is still paying himself $96 million for doing all of that heavy lifting that's gotten Oracle shareholders almost nothing in return. Here's a company that everyone still loves, even as it keeps missing quarter after quarter. It obviously has become so desperate about its lack of a cloud-computing business that it had to partner with Salesforce.com (CRM), the same company it's been dissing privately for years. At one point, Oracle, like Microsoft (MSFT) and like Intel (INTL), was a great company. Now it's just taking up space and paying people fortunes to work there. Oracle shareholders of the world unite and get on the payroll, so you can make fortunes like everyone else there. At least management has finally stopped saying that Sun Micro was a good acquisition.
That's about all the spleen-venting I can do in one day. Please be sure to enter your underperformers in Columnist Conversation. I can't wait to savage them.
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