Filed Under:
Tickers in this Article: AIG, JAVA, SNDK, HIG, AMD, IBM, CHTR, TSM, UMC
There were some huge winners on the list of best-performing mid cap stocks in March 2009, with the names split between financials and technology. Even in a good month for the market, these companies stand out.

In the Spotlight
AIG International (NYSE:AIG) was the best mid cap performer in March 2009 with a return of 138.1%. This company was also the center of attention during the month, after it was reported that the company had paid huge bonuses to top employees despite billions in losses and government bailout money. AIG was caught up in the surge in financials due to short covering by investors who tried to take advantage of the weakened sector by shorting the common stock and buying securities higher up the capital structure ladder. When the overall market rally commenced, these investors had to cover shorts, and stock prices moved up even further. (To learn more about what got AIG into trouble in the first place, read Falling Giant: A Case Study Of AIG.)

10 Tips For Choosing An Online Broker

The performance of Sun Microsystems (Nasdaq:JAVA), which was up 66.74% in March, was the easiest to explain, as rumors hit the street that IBM (NYSE:IBM) was interested in buying the server competitor. The stock popped up immediately on the news, almost doubling in price, but dropped as negotiations dragged on. The last report had IBM giving a price of between $9 and $10 for Sun, and in a sign that investors doubted the deal would occur, this reported price level was significantly higher than the $8.49 that Sun closed at on Friday. IBM walked away from the deal over the weekend, and Sun's shares plummeted over 20% in today's early morning trading.

Takeover rumors also propelled SanDisk (Nasdaq:SNDK) higher, up 57.93% for the month, as investors bid the stock up on speculation that Samsung or Toshiba would be interested in purchasing the company. These rumors may have some credence as Samsung made an offer in September 2008 to purchase the company at $26 a share. The company rejected the offer as being too low. Six months later, however, the stock is selling at only half that price, and management of SanDisk might be wishing they hadn't been so quick to reject the offer. (Check out our Mergers and Acquisitions Tutorial to learn more about the opportunities that exist in corporate restructuring.)

Advanced Micro Devices (NYSE:AMD) rose 51.74% in March on the back of a restructuring initiative that closed at the beginning of the month. AMD spun out its manufacturing operations into a joint venture called Global Foundries, and is now a "fabless" semiconductor company, meaning that it owns no fabrication facilities to manufacture semiconductors. AMD now joins the ranks of other semiconductor companies that simply design and market chips, and outsource manufacturing to outside firms like Taiwan Semiconductor Manufacturing (NYSE:TSM), Chartered Semiconductor Manufacturing (Nasdaq:CHTR) and United Microelectronics (NYSE:UMC).

Hartford Insurance Group (NYSE:HIG) rebounded 53.62% in March. Even after that strong rise, the company is one of the most pounded financial stocks in the sector as investors questioned whether the company has adequate capital to ride out the credit crisis. It seems that almost every day, rumors hit the market on impending downgrades or some other event that is sure to lead to the company's demise, and the stock is still down 89% from its 52-week high. HIG stock also suffers from its exposure to the variable annuity business, and the guaranteed withdrawal benefit that is available to some policyholders.

The Bottom Line
Investors lucky enough to own the best performing stocks in March in the mid cap sector are no doubt celebrating their victory, but the celebration may be a little premature as the grinding bear market has reduced most of these names to a pittance of what they used to be worth. It will take many more months of being on best performing stocks list until investors are made whole.

comments powered by Disqus

Trading Center