It’s bad enough seeing good shares being punished by the general market sell-off, buy when companies are suffering from their own woes too, it sometimes makes me wonder why people buy them.
Look at Standard Chartered (LSE: STAN), for example. With the bulk of its business in Asia, the bank has been hit hard by the Chinese slump. But even without that, it’s had a dire few years of its own doing. The latest is a scandal over the bank allegedly continuing to breach US regulations restricting business with Iran — even after it had been fined nearly $1bn and had promised to cease. And with a number of US authorities investigating now, there are even fears that it could be heading for bankruptcy.
All of Standard Chartered’s woes are firmly the responsibility of its previous top management, which came under intense criticism for a long period. The bank has replaced its board, but that action could well turn out to have been far too late.
I wouldn’t touch Standard Chartered shares now, not even with someone else’s bargepole.
Oh, when will it stop?
Anglo American (LSE: AAL) has had its own troubles in Africa, but it’s successfully offloaded some of its assets. But even as it’s been putting its own house in order, the commodities slump has hit hard and its shares have fallen 55% over the past 12 months.
The share price collapse has left Anglo American’s forecast dividend yielding 7%, but that seems very unlikely to be achieved. The company needs to cut costs, and most analysts have already factored in a dividend cut — and I reckon a 50% slice is about the best thing that could be done in the short term.
Continuing Chinese weakness is likely to keep hitting the firm, but in the longer term I think Anglo American could do well for investors — but if I were looking for a mining investment right now, I’d be going for the company’s more stable competitors.
It’s not just banks and miners being shunned by investors, as shareholders in banknote printer De La Rue (LSE: DLAR) know to their cost. Back in 2010 the firm was hit by a scandal over falsifying security tests on its banknote paper, and that led it to near pariah status in the investment world.
Disappointment upon disappointment
A number of profit warnings in the past couple of years, coupled with a slashing of this year’s interim dividend, haven’t helped, and the shares have collapsed to 468p. The City is expecting a 20% drop in EPS for the year to March 2016, and the mooted 9% recovery in 2017 is too far ahead to assuage my fears.
I expect the company will turn things round in the long term — after all, its products are very much needed and there aren’t too many competitors. But De La Rue has shown the ability to disappoint repeatedly, and I’d want to see an actual return to sustained growth before I’d consider buying.