Airgas Buyout Bid Tops the List

The May-Investments Index of Western Colorado Stocks surged +4.13 percent in February while the widely followed S&P 500 stock index rose +3.10 percent during the month (total return including dividends). Airgas, Inc. (ARG) rebounded off a weak month in January to be the best performing stock in the index a month later (+51.8 percent) while StarTek (SRT), which fell -11.8 percent during the month, was the biggest laggard.

Airgas received an unsolicited merger offer from Air Products and Chemicals for $60 cash on February 5th. A merger would create one of the largest industrial gas companies in the market, but management has asked shareholders to vote against the deal so it’s not clear that it will go through.  Airgas stock ended the month trading at a premium to the cash bid offered. The market has concluded either that another company will come in and make a higher bid, or at the very least that Air Products will have to pay a higher price to complete the acquisition.

StarTek. reported a fourth quarter profit versus a year ago, but the stock has fallen sharply since the announcement. Earnings of 6 cents were slightly below analyst estimates of 9 cents, but more importantly was a miss on revenues, which declined slightly from last year’s levels as opposed to going up, as analysts had expected.

Over the past twelve months, the May-Investments Index of Western Colorado Stocks is up +49.9 percent through the end of February while the overall market has gained +53.6 percent over the same time period. The index began tracking the performance of local stocks three years ago and is down -5.09 percent since it launched, while the S&P 500 has declined -16.46% 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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