CIT Group Chairman and CEO Jeffrey Peek is the newest addition to Mad Money’s Wall of Shame. Under his stewardship, the stock of this lender to small and medium-sized businesses has dropped 96%.
Cramer credited Peek with a string of debt and stock sales that did more to hurt the deals’ buyers than help the company. Back in October 2007, CIT issued 24 million equity units at $25 a piece that investors could convert to common stock if they reached $42. Of course, that never happened, but the CEO managed to raise $600 million.
Another offering followed on April 21, 2008, that generated $1 billion, this time at $11 a share. And later that year, on Dec. 17, CIT yet again sold enough $4 stock to raise $300 million. Investors who took part in any of these deals – even the last one – lost serious money. CIT closed Wednesday trading at $1.64. When Peek took the reins back in July 2004, the stock fetched $37.60.
Despite the new capital, Peek has been unable to save his firm. With bankruptcy all but imminent, he went running to the government with his hands open. But late Wednesday, it appeared that Washington couldn’t help CIT right now. Now it looks like bankruptcy is back on the table.
Cramer said such poor performance shouldn’t be rewarded with federal aid, but he doubts politicians can afford to let CIT go under. Not when so many small businesses seem to depend on the company’s loans. Either way, though, Peek has definitely earned his place on the Wall.
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