There are some losers, too. Shares of USEC ( USU), a leading provider of uranium to the nuclear power industry, are down 50% year to date. It appears as though the market does not believe that equity will survive. The company has had difficulty obtaining loan guarantees from the U.S. Department of Energy in order to bolster its American centrifuge project, which has been fraught with issues. It's hard to imagine this company failing, but as investors sometimes forget, companies go bankrupt all the time and survive, but common stock rarely does in those instances. I still have a position here. Wendy's ( WEN) was a disappointment as well, down about 8.5% year to date. I had high hopes for this one, and owned for several years, before finally throwing in the towel over the summer. My analysis told me that there was great value in the real estate, and with some cost-cutting, and a major successful advertising campaign such as the ones that have rescued this company in the past, Wendy's could be very successful. Instead, the company has treaded water, and made few inroads into re-establishing itself with the consumer. Even value investors lose their patience ultimately, and that's what happened here. If I write a column similar to this one at the end of next year, I have little doubt that current net/net (company trading below net current asset value) Radioshack ( RSH) will be part of it; what remains to be seen is whether it will be a winner or a loser. At this point, this ugly duckling has been a loser given my $3 and change average cost. Much of the investment world has given up on it at this point, which seems to be reflected in the current price. We'll see if this "cigar butt" has a puff or two left. It could be next year's big lesson for me. That lesson will either be:
- "Ignore the crowds, be a contrarian and buy when others are selling", or
- "Stay away from value traps, businesses in highly competitive industries whose best days are behind them."