The continuing weakness in the oil and gas industry again caused the Pelican State Portfolio, a group of Louisiana stocks tracked by The Advocate, to lag behind the performance of the broader market.
The 24 Louisiana-based publicly traded companies that make up the portfolio were up 1.5% for the second quarter. In comparison, the S&P 500, which tracks 500 large companies, was up by 3.3% for the quarter. The Dow Jones Industrial Average, an index of 30 top businesses, was up by 2.6% during the three-month period. The Russell 2000, which follows small-cap stocks that have an average market capitalization of $1.3 billion, was up by 1.5% during the quarter.
The Pelican State Portfolio’s performance was worse over the 12-month period ending in June. The index was down 10.2% since the end of June 2018. While the Russell fell by 4.7% during that time frame, the Dow rose by 9.6% and the S&P increased by 8.2%
“The markets are at exactly the same point we were in October 2018,” said Peter Ricchiuti, a finance professor at Tulane University who tracks regional stocks across the South through the university's Burkenroad Reports. “Stocks are not cheap, but they’re not outrageous like they were in 2000.”
The biggest loser in the Pelican State Portfolio was Lafayette-based Petroleum Helicopters Inc., which was down nearly 69% for the quarter. PHI filed for Chapter 11 bankruptcy protection in mid-March, days before $500 million in debt came due.
The company has been hard hit by declining drilling activity in the Gulf of Mexico, which has taken a toll on the helicopter business. Several of PHI’s competitors have filed for bankruptcy in recent years, most recently Houston-based Bristow, which filed for Chapter 11 in May.
While bankruptcy filings can hurt shareholders, who see their investment in a company vanish, it helps companies by paring back the amount of debt they carry, Ricchiuti said.
“You come out looking good, because you don’t have any debt,” he said. “It’s kind of like being the tallest jockey.”
Another big loser for the quarter was Lake Charles-based Waitr Holdings, which saw its share price fall by nearly 44%. The company went public in November, trading just under $12 a share. It closed the second quarter at just over half that price.
The food delivery company “had become really, really sexy on Wall Street,” Ricchiuti said, hitting a market value of $1 billion. But while the revenue and the number of customers have gone up for Waitr — especially after the business bought out rival delivery service Bite Squad — the business continues to lose money. Waitr posted a $24.7 million net loss in the first quarter after losing $35 million the year before. “The stock is going up so fast and they don’t have any earnings,” he said. “There’s a lot of potential.”
"The massive losses and tech focus Waitr has makes it stand out from other Louisiana public companies,” Ricchiuti said. “We’re pretty much all meat-and-potatoes stocks, so this takes a little bit of getting used to.”
The Louisiana stocks that fared the best in the quarter were those generally seen as safe plays in the market.
Baton Rouge-based H&E Equipment, which sells and leases heavy construction machinery, saw its stock price go up by 45% during the period.
Even with the bump, shares were down 19% from the end of June 2018. Ricchiuti said H&E is a “good company” that was punished by the market over the past year. Investors soured on H&E after it became unlikely that a big federal infrastructure spending bill will happen.
“There’s some sort of bounce there,” he said.
Covington-based Pool Corp. saw its stock price go up by 29% in the quarter, ending June trading at $191 a share. “That company just doesn’t stop,” Ricchiuti said of the pool products and backyard accessories supplier.
Lafayette-based home health company LHC Group was up more than 27% for the quarter.
“With all the trouble with international trade, I can’t think of any business that would be less affected by that than a home health company,” Ricchiuti said. “People need some place to hide from trade issues.”