In my previous article, I discussed the best-performing stocks of 2017. I guess it would be suitable to look at the other, darker side of investing. By darker, I mean investing that result into a (significant) loss. No one likes losing positions and it is generally said that we are much more worried from a loss than happy from a profit even if the amount is the same.

And as the shares are sold to the investors at the IPO, there is always someone holding stocks of a company whose market value is rapidly decreasing. And these companies will be the subject of the following text.

In the table below we can see which companies have lost the most in value since the beginning of this year until 16/3/2017 and the percentage drop, their market cap and finally sector. To avoid penny stocks, I included only companies with a current market value over 300 mln. USD.

No. Ticker Sector Market Cap Perf YTD
1 SDRL Basic Materials 790.17M -55.13%
2 SGY Basic Materials 389.41M -49.39%
3 NH Technology 644.59M -49.09%
4 BW Industrial Goods 451.26M -44.73%
5 FFWM Financial 516.27M -44.21%
6 VSTO Consumer Goods 1.17B -43.85%
7 HZN Services 320.42M -42.75%
8 NAK Basic Materials 338.51M -40.58%
9 TLRD Services 785.47M -39.86%
10 RAD Services 5.27B -38.83%
11 FMSA Basic Materials 1.59B -38.76%
12 SM Basic Materials 2.41B -37.56%
13 ENT Services 367.61M -36.69%
14 PES Basic Materials 336.12M -36.50%
15 BBG Basic Materials 343.82M -36.19%

 

Based on the data above we can see that betting on Seadrill Limited, which is an international offshore oil drilling company, would result in a big loss of 55%. The price has been sinking since 2013 after it peaked at 46,42 USD per share, and currently trades at about 0,7 USD per share. Despite having posted better than expected results for the fourth quarter of 2016 the stock plunged at the beginning of March because of a statement released by the company where it is mentioning the possibility of filing chapter 11, which means bankruptcy. The reason behind this is huge amounts of debt it is supposed to pay as of 30/4/2017, and if the firm will not secure needed resources then one of the possible outcomes is bankruptcy. Its D/E ratio is 1,04, meaning the debt of the company is bigger than equity.

Companies belonging to the same sector as SDRL, basic materials, dominate the list as 7 of them form the entire list. Five of them do business in the oil industry, indicating the oil business is still under pressure and fell of oil in recent years has its victims.

To conclude, firms dealing with basic materials might have not had a bright start of the year, but they still can be a good hedge in other periods and having a small part of the portfolio allocated to this industry can diversify the overall risk. But the significant allocation of funds into these companies could cause the negative outcome, therefore we should thoroughly analyze companies before adding them to our portfolio.