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Shocker! The ten most frightening stocks of 2014

Dan Jones
Written By:
Dan Jones

Retailers and miners come under the spotlight as Investment Week counts down the ten scariest stocks of the year so far.

This year has been a much more difficult time for UK equities than 2013: the All Share has pulled back 5.6% so far, compared with 2013’s 18% gain.

However, 2013 and 2014 do share one thing in common: commodities stocks have been under the cosh once again as falling demand pushes spot prices down further. But in general, this year’s ten Halloween horrors are much more of a mixed bag.

One poor performer which immediately springs to mind but does not make the list is ASOS, the online clothing retailer. It has fallen 65% but is not listed on the All Share.

Other retailers have also struggled, as have a couple of high profile new listings. Below is a list of the ten worst stocks in the All Share between 1 January and 27 October this year.

Asia Resource Minerals logoAsia Resource Minerals
Formerly known as Bumi, a late 2013 name change has not helped turnaround the fortunes of the Indonesian mining firm in which Nathaniel Rothschild still holds an 18% stake.

Rothschild’s resignation from the board following a management dispute saw the company attract negative headlines in 2012-13, and 2014 has been little better thus far: chief executive Nick von Schirnding was ousted in June and falling commodity prices continue to weigh on the stock.

The firm, which at one point this year was seeking to delist entirely, has also had to postpone refinancing plans scheduled for this August. That means it is still seeking ways to refinance $450m in debt due at its Indonesian unit next year.

Xaar logoXaar
A prime example of the reversal of fortunes suffered by some of 2013’s winners this year, inkjet printing specialist Xaar was a fund manager favourite prior to the mid-cap sell-off which first hit in March.

The company saw its share price rise by some 300% last year, but has since retraced all of those gains.

A profit warning in June saw shares drop 20%, lowered sales guidance in June after a slowdown in Chinese demand for its ceramic tile technology saw it shed another 25%, and a similar warning this month wiped a further 35% off the share price.

Petropavlovsk logoPetropavlovsk
Another firm which has been hampered by market expectations of a debt refinancing deal this year, the Russia-focused gold miner announced last month that it is considering a rights issue.

With the gold price flat year-to-date following last year’s plunge, still more than a third below its 2011 high of over $1,900 per troy ounce, Petropavlovsk could breach banking covenants by the end of 2014 if a restructuring deal is not agreed.

Partnership Assurance logoPartnership Assurance
With the words “no one will have to buy an annuity”, Chancellor George Osborne outlined a pensions revolution in his March 2014 Budget, and investors flagged Partnership as one of the first against the wall.

The annuity provider, which only listed in the summer of 2013, said the proposals did not affect its range of products, but saw its shares fall by 50% on the day. The group brought forward its Q3 figures this month in an effort to reassure, but shares sold off again.

Carclo logoCarclo
The small-cap plastics maker has never recovered from an early January profit warning which wiped almost a third off its share price. Pointing to lower than expected take-up of technology for touchscreen devices, a subsequent update in June did little to reassure investors and the stock promptly lost another 25%.

This month the business warned on profits again, and said it may have to write down the value of a lossmaking circuit board division ,sending shares down a further 15%.

Kenmare logoKenmare Resources
The titanium miner dropped out of the FTSE 250 and faced an investor revolt over management pay in the first half of 2014 as lower demand damaged the share price.

There appeared to be light at the end of the tunnel this summer, the stock having jumped 30% on 26 June following a takeover approach from peer Iluka Resources.

Four months later, with the two firms’ discussions yet to produce anything concrete, the miner is at its lows for the year.

AO World logoAO World
The online white goods retailer did not even list until February, but a torrid time since then means it makes this year’s list.

In a move typical of the near-euphoria seen at the start of the year, the company floated with a market cap of £1.2bn on 2013 pre-tax profits of £8m – and promptly jumped over 30% upon listing on 24 February.

But with short sellers circling and broader investor sentiment wavering, the stock has slid sharply since that point. Those fund managers who bemoaned not being able to get a piece of the IPO are probably more thankful now.

Ferrexpo logoFerrexpo
Commodity-centric businesses have been punished this year, but for pellet maker Ferrexpo, whose business is based in Ukraine, 2014 has been a double whammy.

The firm initially appeared to have weathered the geopolitical crisis in the region well, announcing plans to pay a special dividend despite the government announcing tax increases.

But as tensions between Russia and Ukraine rumble on into the autumn, and global iron ore prices continue to plunge, analysts have cut ratings and the share price has headed south.

Foxtons logoFoxtons
Another IPO launched in a blaze of glory, this time in September 2013, the estate agent came to market just when the London housing market in particular was beginning to take off once more.

This year, however, a slowdown in house price growth has gradually taken hold as the months progress, culminating the business issuing a profit warning
in October. Foxtons pointed to a “sharp” drop in London home sales in Q2
and shares immediately slumped by almost 20%.

Tesco logoTesco
The most high profile stock to make this year’s list, the FTSE 100 supermarket has lurched from one crisis to another this year, culminating in the £263m accounting error that emerged over the summer.

After that scandal and a trio of profit warnings, new CEO Dave Lewis and new CFO Alan Stewart were both rushed in ahead of time, while chairman Richard Broadbent will stand down at the start of next year. Tesco must now address its burning problem – how to compete with discount supermarkets – at the same time as facing a Serious Fraud Office probe into the payments it erroneously booked from suppliers in its first-half results.

All data 1 January – 27 October. Stocks which have been diluted by rights issues (Johnston Press, Mothercare, Premier Foods) or paid proceeds of divestments to shareholders (Vodafone) have not been included.
Source: S&P Capital IQ