After Hurricane Katrine passed last year, I used MSN Money’s Power Searches to screen for one-week high-volume losers and I looked over the “Winners and Losers” list in Barron’s. I then went though the list of stocks and tried to determine if their decline was directly related to Katrina. I came up with seven stocks that declined more than ten percent in the week following the hurricane.
I have been curious as to what has happened to those seven stocks. This past weekend I took a few moments to look up the current prices of those stocks and calculate the one year rate of return from when I first wrote about them. Here are the numbers:
- Pinnacle Entertainment Inc. (PNK)
- Closing Price Sept. 2, 2005: $19.18
- Closing Price Sept. 1, 2006: $25.78
- Total Return: 34.4%
- Ruth’s Chris Steak House (RUTH)
- Closing Price Sept. 2, 2005: $17.82
- Closing Price Sept. 1, 2006: $19.81
- Total Return: 11.2%
- PXRE Group Ltd. (PXT)
- Closing Price Sept. 2, 2005: $21.49
- Closing Price Sept. 1, 2006: $3.92
- Total Return: -81.6%
- Hancock Holding Company (HBHC)
- Closing Price Sept. 2, 2005: $30.48
- Closing Price Sept. 1, 2006: $51.90
- Total Return: 73.4%
- Sizeler Property Inv. (SIZ)
- Closing Price Sept. 2, 2005: $11.10
- Closing Price Sept. 1, 2006: $15.00
- Total Return: 39.1%
- Whitney Holding Corp. (WTNY)
- Closing Price Sept. 2, 2005: $28.67
- Closing Price Sept. 1, 2006: $35.07
- Total Return: 26.4%
- Hibernia Corp. (HIB)
- Closing Price Sept. 1, 2005: $31.75
- Closing Price Nov. 16, 2005: $30.46
- Total Return: -4.1%
Even with the massive infrastructure damage caused by Hurricane Katrina, these seven stocks directly effected by this natural disaster recovered surprisingly well. The only blowup was PXRE Group. This reinsurer that provides coverage to other reinsurers (retrocessional reinsurance) definitely took a beating. I had noted that Katrina losses could end up so large that providers of retrocessional reinsurance would be tapped to fund claims. That appears to have been the case with PXRE Group.
One reader mentioned OCA, Inc. as another stock directly impacted by Katrina. I looked them up and discovered that they filed Chapter 11 bankruptcy on March 15, 2006. However, they were not doing well even before the hurricane hit.
On a more positive note, I thought Hibernia’s planned a merger with Capital One Financial Corp (COF) was in real trouble. However, the New Orleans based lender was acquired in November by Capital One.
The big winner among the seven Katrina stock, Hancock Holding Company, was a real surprise. I did not expect a banking company servicing the Gulf of Mexico region to do well in the aftermath of the series of hurricanes that hit that region in 2005.
In my article last year, I noted that Ruth’s Chris Steak House and Sizeler Property Investors were worth watching. Sizeler Property Investors has performed very well since my post last year, returning 39 percent. Ruth’s Chris Steak House however only returned a more modest 11 percent gain.
As a value investor, I’m not really surprised by how well the price of these companies has rebounded. Mr. Market often over reacts to bad news. I think I will be a bit more confident in making wise investment decisions the next time disaster strikes. There are definite opportunities in these situations.