Linn Energy LLC (LINE), Weatherford International Ltd (WFT): One Glaring Reason to Sell a Stock

Improperly hunting for tax havens
While in the midst of reconciling tax-accounting issues, Weatherford International Ltd (NYSE:WFT) came under investigation of the SEC for potentially selling goods to sanctioned Iran and Syria back in March of 2012. The stock has yet to recover and has traded down 20.6% since March 16, 2012, while the S&P 500 is up 15% and rival Halliburton is up 23.9% over the same time frame.

Accounting issues have continued to plague Weatherford International Ltd (NYSE:WFT), along with potential improprieties surrounding Iraqi contracts, resulting in the delay of its latest annual report. All of this follows restatements of its 2010 and 2011 annual reports. Over the last three years, Weatherford International Ltd (NYSE:WFT) has underperformed the S&P 500 and Halliburton by 52.2% and 56.9% respectively.

Once the veil is lifted

Foolish final note
While it may be a bit more difficult for the average investor to unearth accounting malpractice within their portfolio, the SEC has a fairly good track record. Even though some investigations might not warrant as much awareness, those surrounding accounting issues can clearly impact a company’s market value in a substantial way. Being able to sell shares prior to or immediately following an announcement might not always be possible (or legal), but investors should certainly consider whether or not a company deemed suitable for an investigation is worth any space at all in their investment account.

The article 1 Glaring Reason to Sell a Stock originally appeared on Fool.com is written by Taylor Muckerman.

Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Ebix.

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