Rising oil prices helped the Pelican State Portfolio, a group of Louisiana stocks tracked by The Advocate, outperform the market during the first quarter.
The 23 Louisiana-based publicly traded companies that make up the portfolio were down 0.1 percent for the first three months of the year. That was the same first-quarter performance as the Russell 2000, which follows small-cap stocks that have an average market capitalization of $1.3 billion. The Dow Jones industrial average, an index of 30 top businesses, dropped by 2.8 percent during the three-month period. And the S&P 500, which tracks 500 large companies, was down 1.6 percent.
“The market was pretty flat,” said Peter Ricchiuti, a finance professor at Tulane University who tracks regional stocks across the South through the university's Burkenroad Reports. “You can make the case that the market didn’t do a thing from point-to-point, but investors were white-knuckling it the whole time.”
While the broader markets were hurt by fears about a trade war with China, the scandal involving data privacy at Facebook and President Donald Trump's battle with Amazon, Louisiana stocks were aided by rising oil prices. Crude oil traded at above $60 a barrel for most of the first quarter of the year, the first sustained run at that price since late 2014, according to figures from the U.S. Department of Energy’s Energy Information Administration.
“Oil prices were very strong,” Ricchiuti said. “This alone is not enough to get people to work back in the Gulf of Mexico …, but there’s a good demand for oil.”
The rising oil prices helped some companies, such as SEACOR Marine Holdings, which saw its share price rise by 63 percent in the quarter. The Houma-based business went public in July, when International Shipholding Corp. emerged from bankruptcy as part of a spinoff from SEACOR Holdings.
“Investors are getting their arms around this company,” Ricchiuti said. ”The spinoff confused a lot of people.”
Another big winner during the quarter was Tidewater, the New Orleans-based oil and gas service company. Shares of Tidewater were up more than 17 percent for the quarter, after the company wrapped up a prepackaged bankruptcy in 2017 that cleared up much of its debt.
Covington-based Pool Corp. continued its winning streak. Shares of the stock rose nearly 14 percent during the quarter. Pool Corp. ended March trading at more than $146 a share.
“That’s a fantastic story,” Ricchiuti said. “They keep hitting new highs and it doesn’t stop. It may seem like a boring thing to talk about, wholesalers of pool supplies, but they’ve become a juggernaut.”
Despite the first-quarter gains, the performance of Louisiana stocks lagged the national average because of the sustained low oil prices over a 12-month period. Overall, the Pelican State Portfolio went up 3.98 percent in the 12-month period that ended on March 30. In contrast, the Dow was up 16.6 percent over that time frame, the S&P went up by 11.8 percent and the Russell was up by 10.4 percent.
PetroQuest Energy, the Lafayette-based oil and gas production company, was the biggest loser during the quarter. Shares of PetroQuest were down 69 percent during the quarter and the stock ended the quarter trading at 58 cents a share. Last week, the company announced that it faces delisting from the New York Stock Exchange because the shares have been trading for a month at an average of below $1 a share and its market capitalization had fallen below $15 million.
Investors are trying to figure how a company like PetroQuest can make it in the current environment, Ricchiuti said. “Look at Stone Energy, they had to go into a prepackaged bankruptcy,” he said.
Another stock that had a rough quarter was Covington-based Globalstar, a satellite phone service. The value of its shares dropped by nearly half in the first few months of the year. “They had a terrible quarter,” Ricchiuti said. But things turned around for Globalstar in the first few weeks of April. Morgan Stanley picked up the stock and recommended it to investors, an unusual move because of the size of the company.
Then Jason Mudrick, a New York-based investor offered to loan the company $150 million because he said the stock was deeply undervalued. Mudrick said Globalstar’s satellite spectrum is a “major asset” in the coming world of super fast Wi-Fi networks. “That was a game-changer for them after the quarter ended,” Ricchiuti said.
Burkenroad will hold its 22nd annual conference from 8 a.m. to 1 p.m. April 27 at The New Orleans Sheraton Hotel, 500 Canal St. Representatives from 36 publicly traded companies, including IberiaBank, Crown Crafts, Sanderson Farms and Denbury Resources will be on hand to discuss their businesses. The event is free and open to the public. Registration is at freeman.tulane.edu.