Wellpoint Replaces Bankrupt Mesa Air in Local Stock Index

The May-Investments Index of Western Colorado Stocks remained flat percent in December while the widely followed S&P 500 stock index rose +1.9 percent during the month (total return including dividends). Qwest was the best performing stock in the index (+15.3 percent) while Kroger Corp., which fell -9.7 percent, was the biggest laggard.

Mesa Air Group (MESA) succumbed to economic pressures and declared bankruptcy. In November, United declined to extend a contract in which it had been paying Mesa to operate 26 regional jets under the United Express brand. Doug May, President of May-Investments, noted that “Nasdaq will delist the shares on January 14, but even before this filing it was clear that our index needed to remove this stock from the index.”

Wellpoint Inc. (WLP) will replace MESA in the index, beginning in January of 2010. “Wellpoint is the parent company for Anthem Blue Cross and Blue Shield,” May said, “In Grand Junction, particularly, the fact that we are a regional health center drives a significant portion of our economic activity. In the past, this dependence on the healthcare industry was probably underweighted in the index, so the addition of Wellpoint helps us meet our objective, which is to have a stock index that fairly represents what is going on in our local community.” The composition of the index is rebalanced periodically in order to re-set the index to an equally weighted component structure. As part of this rebalance, most stocks in the index were rebalanced as a result of the changes made to the index in January.

Year-to-date, May-Investments Index of Western Colorado Stocks is up +20.9 percent through the end of the year while the overall market has gained +26.5 percent over the same time period. The index began tracking the performance of local stocks three years ago and is down -7.99 percent since it launched, while the S&P 500 has declined -15.95% during the same period of time.

Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies.

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