Local Stocks Nudged Lower in March

The Scout Partners Index of Western Colorado Stocks fell in January, returning -0.30% versus a much sharper -2.2% decline for the widely followed S&P 500 stock index. The 25 stock index focuses on large companies whose operations have a significant impact in Western Colorado. It includes major Mesa County employers such as Wal-Mart, Halliburton, Kroger (City Markets), StarTek, CRH (United Companies), and the Union Pacific Railroad. The performance of Denver-based telecommunications giant, Qwest, helped stabilize the February index performance.

Rising 9% in the month, Qwest (Q) ended the month at $8.88. “Qwest was awarded some fairly minor business contracts during the month and announced a small reduction in staff mid-month, about the time that the stock took off,” said Doug May, President of Scout Partners, LLC. “Qwest also received favorable mention by “Mad Money” showman and former hedge fund manager James Cramer after Wall Street investment firm, CIBC, upgraded the stock on February 12th,” May said. Later in the month, the Federal Communications Commission moved to eased price controls on Qwest’s long-distance services. More recently, on the last day of the month Qwest announced that its CFO, Oren Shaffer, will retire effective April 1.

Choice Hotels (CHH) was the index laggard, returning -11.4% during the month of February. Choice Hotels operates as a hotel franchisor with lodging properties under the Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econolodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, Cambria Suites, and Flag Hotels brand names. May noted that “the company announced in January that the CEO was leaving, but in February they announced a special charge to earnings of 3 cents per share to buy a really nice gold watch for the departing CEO,” and a number of Wall Street research firms cut their ratings on the company subsequent to the disappointing earnings guidance.

 

Scout Partners equal weighted Index of Western Colorado Stocks is comprised of 25 stocks that hope to reflect, to some degree, business conditions in Western Colorado. Reflecting the local economy, the index has a large (over 30%) concentration in the energy sector, which tends to drive index performance. The next largest sector concentration is in industrial stocks, which comprise over 20% of the portfolio. Local stocks are up 0.57% for the year while the overall market has returned -0.47% over the same time period.

 

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