If Carly Fiorina Becomes President, Sell These 5 Stocks
It's generally difficult to say how a prospective president might affect the U.S. economy, much less a single stock, but the task is a little easier in the case of GOP candidate Carly Fiorina, who once served as CEO of a Fortune 500 company.
During Fiorina's term as CEO of Hewlett-Packard (HPQ) - Get Report, which lasted from 1999 until she was forced out in 2005, the company's stock fell 59% as she navigated the collapse of the dot-com bubble and orchestrated a merger with rival Compaq.
Much of the criticism of Fiorina's performance as CEO focuses on the rocky aftermath of the transaction, which didn't generate the earnings boost investors wanted and sparked well-publicized infighting between the company's board and management.
The former CEO nonetheless says her time in the C-suite makes uniquely qualified to serve as president, partly becomes she's accustomed to a high degree of accountability.
"As chief executive of HP, I had to stand every 90 days and defend our results in excruciating detail, and if I misrepresented those results in any way, I could be held criminally liable," Fiorina has said. Should she become president, Fiorina's link to Hewlett-Packard could generate unflattering publicity for her former employer.
Furthermore, her plans to crack down on illegal immigrants, in part by making it more difficult for them to obtain jobs, would likely increase administrative costs for companies that hire them. And a vague proposal to slash the tax code to three pages would throw a curve ball at professional accountants.
Here's a look at some of the companies affected:
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Hewlett Packard -- Both of Them
Although it's been more than 10 years since Fiorina was ousted from HP, her legacy looms large. Even before her campaign, it was rare to hear a mention of the company without a reference to its former CEO or the Compaq merger.
So headline risk would be a side effect of her candidacy, especially in light of the tech company's recent decision to split into two businesses: Hewlett-Packard Enterprise (HPE) - Get Report , which will focus on selling hardware to businesses, and HP Inc., which will focus on personal computers and printers.
For what it's worth, the company's current CEO Meg Whitman, who was the head of eBay, and like Fiorina, dabbled in politics, doesn't support Fiorina's White House bid even though she is sympathetic about the challenges Fiorina faced as CEO.
"While I think business strengths are important, I also think having worked in government is an important part of the criteria," Whitman, who ran for governor of California in 2010, said in an interview with CNN. "It's very difficult for your first role in politics to be President of the United States, and so I think having experience in either the Senate or as the governor of a state is really important."
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Intuit & H&R Block
While Fiorina's campaign has focused more on broad ideas than specifics, the candidate has made one thing clear: She thinks the U.S. tax code is too long.
"Only big companies, powerful interests, and wealthy and well-connected people can hire all the lobbyists, accountants, and lawyers you need to figure out that 73,000-page tax code and how to make it work for you," Fiorina said in an interview with Fox. "So, we've got to get it down to about three pages, literally."
One way to achieve such a minuscule tax code is to "lower every rate, close every loophole," she has said.
With a three-page tax code, households probably wouldn't need to worry much about itemizing deductions and keeping track of receipts. Filling out Form 1040, if it still existed, would likely be much less of an ordeal since deductions for things like mortgage interest and child care, as well as penalties for retirement-account withdrawals, could be relegated to history.
Under this model, the household need for tax services from H&R Block (HRB) - Get Report and Intuit (INTU) - Get Report , the provider of TurboTax, would be greatly reduced, and it's unlikely such products would be in high demand at the corporate level either.
Of course, whether Fiorina would succeed in enacting such a system is another question entirely. While voters tend to see tax breaks for others as unnecessary "loopholes," they often view the ones they receive themselves as entirely valid.
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Intercontinental Hotels Group
Fiorina hasn't gone so far as to say that the U.S. should build a wall between itself and Mexico, as her rival Donald Trump has, but she does believe that the border needs strengthening. She also says employers should do a better job of verifying their employees' residency status.
Pressure for a more thorough background check could prove a significant cost to hoteliers like Intercontinental Hotel Group (IHG) - Get Report , which owns the Holiday Inn brand, since 31% of the industry's labor force are immigrants, according to data compiled by Brookings.
That data largely counted immigrants who had become citizens or obtained legal residency status. Brookings acknowledged that illegal immigrants are also a meaningful component of the hotel industry's labor force but said their status makes gathering reliable figures difficult.
Either way, more comprehensive -- and thus, more expensive -- background checks would represent greater operating costs for hotel chains, which could be passed on to consumers or drag on stock prices -- or both.
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