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On Feb 22, Michael Baker (BKR) lost 25% of its value, due to their announcement that they needed to re-state their financial statements for the first three quarters of 2007, and the associated news that Klafter & Olsen will be investigating their possible unlawful conduct. What are your opinions about this news?

Anytime a company says the word “re-state” it is not good, since there are automatic trading systems that trade on key words. In other words, if you say the wrong word, the stock gets punished.  The stock is now rated as a “B” in PortfolioGrader Pro and will likely meander sideways for a while longer.  The key now is for the company to release better than expected earnings or provide good guidance.  Michael Baker’s (BKR) problems seem to be contained to one division and there is no evidence that its re-stated earnings will be substantial.  However, the damage has already been done, so the stock again will likely meander sideways for a while.

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