Baker Hughes Buys Into List of Local Stocks

The May-Investments Index of Western Colorado Stocks increased +2.69 percent in April while the widely followed S&P 500 stock index rose +1.58 percent during the month (total return including dividends). Arch Coal (ACI) was the best performing stock in the index (+18.2 percent) while Wellpoint (WLP), which fell -16.4 percent during the month, was the biggest laggard.
Baker Hughes completed its acquisition of BJ Services and replaces BJS in the index. Baker Hughes has been working to expand its presence in the Middle East and Russia. By adding BJ Service’s pressure pumping products to the Baker Hughes product portfolio, now it can compete more effectively for international contracts that require a more comprehensive range of capabilities. The merger received Department of Justice approval late in the month and closed on April 28.

Arch Coal reported a first quarter earnings miss, but the company raised its 2010 earning guidance based on forecasted improvements in its domestic steam coal markets. Wellpoint shares declined after the health plan company cancelled its proposed massive rate increase in California. When Wellpoint announced the rate increases, some as high as 39 percent, the move almost single-handedly revived the moribund Obamacare legislation. Now we find that the rate increases didn’t stick, after all, but the legislation did.

Year-to-date, the May-Investments Index of Western Colorado Stocks is up +9.3 percent through the end of April while the overall market has gained +7.1 percent over the same time period. The index began tracking the performance of local stocks in December 2006 and is up +0.6 percent since it launched, while the S&P 500 has declined -10.0% 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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