Dump these loser stocks this fall, Wolfe Research says. It could help cut next year’s tax bill
Mutual funds are about to embark on a round of late-season selling, putting several stocks at risk of sharp declines, according to Wolfe Research. September, October and December are the most common fiscal year-end months for mutual funds, which tend to dump their biggest losers starting in mid-September to offset realized gains elsewhere in their portfolios. Called tax loss selling, this helps the funds limit taxable capital gains distributions they make to shareholders each year, reducing the tax burden for retail investors. “Historically, avoiding the biggest year-to-date losers has been a positive alpha generating strategy heading into the last several months of the year,” said Chris Senyek, chief investment strategist at Wolfe Research. “The reason is that the market’s biggest laggards can be subject to selling pressures by investors looking to harvest capital losses and/or provide ‘window dressing’ for their annual reports,” Senyek added. Although the S & P 500 is up more than 11% in 2026, there are always stocks that lag the broader market. Wolfe updated its tax-loss selling basket, comprised of stocks that have either dropped more than 20% in 2026 or in the last 12 months, or that have fallen at least 20% compared to their 12-month volume-weighted average price. Here are a few stocks that turned up. This year has brought plenty of suffering for Nike , off more than 40% in 2026 and down nearly 50% in the past 12 months. In June, the athletic shoe giant offered a bleak outlook for its fiscal first half ending in November, expecting little change in earnings. Analysts have grown downbeat on Nike, which has recently received downgrades from Truist and JPMorgan. BMO Capital Markets initiated coverage of Nike on Tuesday, rating it underperform. “It is not the time to Just Do It,” BMO’s Kelly Crago wrote, noting that “slowing lifestyle demand, a full China distribution reset, and structurally lower margins push a fully recovered ~$3.00 EPS out to FY31.” Campbell’s Company also made it to Wolfe’s tax-selling basket. Shares in the canned soup and Pepperidge Farm company have slumped almost 22% in 2026, and more than 35% in the past 12 months. The New Jersey-based company is a victim of inflation, particularly in packaging and energy, according to Stephens analyst Jim Salera. In June, he cut his rating on Campbell to equal weight. “Outside of promotional spend, margins will likely see continued inflationary headwinds driven by energy costs along with packaging,” the analyst wrote. “With pricing flexibility increasingly constrained, we believe FY27 gross margin is more likely to move lower than higher, even as cost-savings initiatives accelerate.” Tax-loss selling for retail investors Mutual funds aren’t the only investors who can benefit from dumping their losers as the end of the year approaches. Wolfe noted that there’s a second round of tax-loss selling that runs from mid-November to mid-December, with pressure then coming from retail investors who want to dump their dogs. Individual investors can realize some of their losses and use them to offset capital gains elsewhere in their portfolio. If losses exceed gains, as much as $3,000 in losses can be used to offset ordinary income. Additional losses can be carried forward into future years. Be sure to avoid violating the wash sale rule: If you sell an asset to realize a loss but buy a similar replacement within 30 days before or after that transaction, the IRS won’t allow you to claim the loss on your taxes.
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