Advertisement
Investing

Gulf Coast Fund Thrives After Hurricane Katrina

Hancock Horizon Burkenroad invests in small companies in Louisiana and other Southern states. Judging from its growth, investors are optimistic.

The recovery from Hurricane Katrina is a long, hard slog for New Orleans. While the French Quarter has rebounded, the Lower Ninth Ward still resembles a war zone more than a year after the hurricane wreaked its fury. Yet, investors remain confident in a Gulf Coast comeback. One gauge of their enthusiasm for the region and the Crescent City is the Hancock Horizon Burkenroad fund. It invests mainly in stocks of small companies based in the Big Easy and surrounding Southern states. Assets in the tiny fund have nearly doubled, to $22 million, from just $12 million a year ago. "We got a lot of attention from people who want to invest in the Katrina recovery," says David Lundgren Jr., the fund's manager.

Advertisement - Article continues below

Student analysts at Tulane University, in New Orleans, aid Lundgren's search for small-company stocks. The Burkenroad program, run by Tulane finance professor Peter Ricchiuti, a former professional analyst, assigns students to research stocks of 50 regional companies. Students mainly follow obscure firms -- Ricchiuti calls them "stocks under rocks" -- that are not covered by the pros and sport market values of less than $500 million. The student analysts meet with company managers and produce reports each semester.

Advertisement
Advertisement - Article continues below

Tulane closed for a semester last fall to repair Katrina damage, but Burkenroad analysts were back in action by January. Lundgren chooses about half of the fund's 56-stock portfolio based on Burkenroad research, which is available free at www.burkenroad.org.

Energy stocks represent a quarter of the fund's assets. Among the holdings are many small firms that supply services and equipment to deep-sea oil rigs. One long-time holding is Superior Energy Services (symbol SPN), which rents lifeboats and other equipment to drilling outfits. Ricchiuti expects this company in particular to benefit from the recently announced discovery of a huge oil and gas deposit in deep waters of the Gulf of Mexico. The fund also owns a stake in Energy Partners (EPL), an independent oil and natural gas producer based in New Orleans that faces a hostile takeover bid by Woodside Petroleum of Australia.

Local banking stocks are another favorite in the Burkenroad fund. Top-ten holding Iberiabank Corporation (IBKC) is a prime example. Recently at $59, shares of the 119-year-old Gulf Coast bank have risen 12% in the past year. Regional banks have received more deposits because of hurricane-related insurance settlements. Plus, Ricchiuti says, banks expect huge loan demand from residents as they rebuild.

As a play on a Gulf Coast recovery, you could do worse than Hancock Horizon Burkenroad (HYBUX, 800-522-6542). The fund gives you one place to invest in many overlooked companies that could gain from a regional resurgence. Over the past three years, the fund has returned an annualized 16%. Its D shares levy no sales charge but carry above-average annual fees of 1.65%. If you pick your own stocks, the Burkenroad Web site is a good place to troll for ideas.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for paying estimated taxes, IRA or HSA contributions, and other deadlines, there's more to do by July 15 than just filing your feder…
July 14, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Tax Day 2020: When's the Last Day to File Taxes?
tax deadline

Tax Day 2020: When's the Last Day to File Taxes?

Thanks to the coronavirus pandemic, the 2020 tax deadline was pushed back to give taxpayers (and tax preparers) more time to file returns.
July 14, 2020

Recommended

13 Best Vanguard Funds for the Next Bull Market
mutual funds

13 Best Vanguard Funds for the Next Bull Market

Optimistic that the bounce since March is indeed the start of the next bull market? Here are the 13 best Vanguard funds to help you make the most of i…
July 7, 2020
15 Best Fidelity Funds for the Next Bull Market
mutual funds

15 Best Fidelity Funds for the Next Bull Market

Investors looking to squeeze more profit from the next bull run can look to Fidelity funds for strong active management and tactical investments.
July 7, 2020
10 Stocks to Invest in the Health Care Revolution
healthcare stocks

10 Stocks to Invest in the Health Care Revolution

These companies are fighting disease and improving our standard of care.
July 4, 2020
Cash In With This Gaming ETF
Technology

Cash In With This Gaming ETF

Cash in on the video gaming craze with this fund.
July 1, 2020