If your stock portfolio looks dinged up these days, take heart. The last few months have also been hard on the bulls participating in our annual stock-picking contest. From the end of October 2007 through Wednesday’s market close, their 12 long calls are down an average 15%, compared with a 9% drop for the S&P 500.
The bears have done better. So far in the contest, four of their five short-sale ideas are in the red, showing an average price decline of 17%.
Washington, D.C. – The Forbes Beltway Index tracks the market progress of the publicly held companies that figure among the 1,000 largest contractors working for the U.S. federal government.
Each Monday, we update price data for the index, in which we give equal weight to each of the component stocks, which number 202. With an equal-weighted index, all components have the same contribution to the index value. This contrasts with big indexes such as the Standard & Poor’s 500, which are weighted toward companies with the largest market capitalizations.
We get our information on government contractors from Eagle Eye Publishers, a 10-person research company in Fairfax, Va. Eagle Eye caters to both commercial and government clients. Among its public sector customers is the Congress.
The U.S. government does around $430 billion in business with contractors each year. Eagle Eye’s specialty is analysis of prime contracts, or those that the federal government awards directly to a company.
Full story at Forbes.com
Washington, D.C. – Since April 2006, we’ve presented the Forbes Beltway Index on Forbes.com. This week, we revise and expand the list with a new approach.
Our new methodology, discussed in more detail here, allows us include more government contractors than we did in our prior Beltway Index efforts. Our starting point now is the 1,000 largest contractors to the U.S. federal government for fiscal 2007 (ended September 2007), with information provided to us by research firm Eagle Eye Publishers.
From that group of 1,000 contractors, we identified the publicly traded companies. That narrowed the list down to 202, based on fiscal 2007 data.
Full story at Forbes.com
Washington, D.C. – As part of our annual survey of chief executive pay at America’s 500 biggest companies, we took a closer look at aerospace and defense. For the last few years, the sector has jumped on robust defense budgets and a rebounding commercial aerospace market.
In that time, compensation for the leaders of America’s largest aerospace and defense concerns has also ballooned. Take the six in the first of the accompanying tables. Their stocks delivered a 30% annualized total return during the companies’ last three fiscal years. By our tally, total compensation for those companies’ chief executives increased an average 50% annualized during that period.
In Pictures: Aerospace Pay Flying High
For 2007, the average total compensation among aerospace and defense companies in our annual salary survey was $20.6 million, vs. an average $12.8 million for all 500 companies surveyed. The median figure, or midpoint in the range, for the nine aerospace and defense companies in our survey was $14.6 million, vs. a median of $6.5 million for all 500 chief executives in our print rankings.
WASHINGTON, D.C. – Silicon Valley entrepreneurs are infamous for complaining about the burden of government regulations. But as Splunk, a San Francisco-based data analytics and search company, has discovered, there can be gold in red tape.
Splunk’s software organizes and tags unstructured, computer-generated information such as Web server access logs, configurations and alerts. Splunk users can then search that indexed data, via a browser-like interface, to troubleshoot network problems, monitor security and track trends such as Web surfing behavior.
Four years ago, Michael Baum and two colleagues founded Splunk to help data center administrators diagnose problems across a server system. Their cheeky marketing material got our attention with its use of terms like “borked” and snarky catch phases like “Take the ‘sh’ out of IT.” The company’s moniker is a play on “spelunking,” a term coined by IT specialists to describe sifting through mountains of machine data.
Splunk’s technology and Silicon Valley hipster shtick caught on quickly with a stodgier crowd: government bureaucrats. This was an unexpected turn of events, says Baum, but one the company is eagerly exploiting.
Full story at Forbes.com
Washington, D.C. – Turnout was good this week for a legislative conference organized by the American Hotel & Lodging Association, a trade group. But as they took in cherry blossoms and sunny weather in Washington, hotel execs weren’t treated to a favorable political outlook.
“Under the usual rules of political gravity, we Republicans are cooked,” said Michael Murphy, founding principal of government relations outfit DC Navigators, on Monday. “In the House and Senate, it’s going to be bad for Republicans.”
Tuesday, Republican Congressman Ric Keller, whose district includes Orlando, Fla. told the hotel crowd that the upcoming election will be determined by independent voters. “I don’t know how independents are going to feel about Iraq six months from now,” he added, “but right now they’re not too crazy about it.”
Not all hoteliers are conservative, of course, but the American Hotel & Lodging Association (AHLA) tends to lean that way. And any erosion of the Republican minority could prove a setback for hotel operators, namely on labor issues.
Full story at Forbes.com
Washington, D.C. – In a shaky market, hospital stocks have lagged as a group. The seven in the table below trade an average of 28% off their 52-week highs, versus an equivalent decline of 14% for the S&P 500 index.
Yet, while it sputters in the marketplace, the hospital business remains well-oiled inside the beltway.
“Everyone knows the hospitals have been struggling for years with bad debt, with the uninsured, with reimbursement issues, with being squeezed by managed-care companies and so on,” says Michael Wiederhorn, executive director and equity analyst at Oppenheimer. “Republican, Democrat–no one wants to see the hospitals struggle or wants to take money away [from them].”
The mood this week has been suitably upbeat at the annual membership meeting in Washington of the American Hospital Association (AHA), an advocacy group. A brass band greeted hundreds of hospital execs as they filed into a hotel ballroom for a legislative briefing Monday. Like a ballgame, the morning session opened with the national anthem and cheers.
“The turnout for this annual meeting, our 39th, is terrific,” said American Hospital Association Chief Richard Umbdenstock. Good thing for him: Wednesday, he’s sending attendees (1,700 registered) to Capitol Hill to hit up legislators on AHA’s top priorities.
Washington, D.C. – Advanced Micro Devices, the Sunnyvale, Calif., semiconductor concern, is in town this week for FOSE, an annual public-sector technology trade show that attracts 20,000 buyers, sellers and hanger-ons to the nation’s capital. At exhibition booths, breakfast speeches and in its own sponsored meeting room, AMD is making its case before the Beltway crowd.
In doing so, AMD (nyse: AMD – news – people ) certainly can’t tout its recent stock market performance. The company’s shares have slumped 62% from a 52-week high, versus a 14% decline in the S&P 500 index. At six bucks, AMD goes for 0.6 times sales–less than one-fifth the 3.3 price-to-sales multiple for shares of bigger rival Intel (nasdaq: INTC – news – people ).
AMD shareholders have been suffering for some time; two years ago the stock stood at $43. Will it rebound to those heights? We haven’t a clue. But we can say that AMD’s success in the public sector provides some support for the case made by AMD bulls.
Full story at Forbes.com
Washington, D.C. – So far in the 2008 election cycle, Barack Obama has pulled in the most dollars from folks working for the 118 companies that make up the Forbes Beltway Index.
Using data from the Center for Responsive Politics, a nonpartisan research group in Washington, D.C., we tallied individual contributions made this year and last, through March 3, for Hillary Clinton, John McCain and Obama.
The Center for Responsive Politics’ database, searchable here, tracks individual contributions of $200 or greater, as smaller contributions are not part of the public record. Note also that we did not survey contributions made to political action committees.
By the individual contributions measure, Obama’s take adds up to $962,000 from people working at Forbes Beltway Index companies. Clinton and McCain, respectively, show contributions of $771,000 and $525,000.
Full story at Forbes.com
Washington, D.C. – In its mission statement, the National Biodiesel Board has a simple goal. By 2015, the Jefferson City, Mo.-based trade group would like to see 5% of the U.S.’ diesel needs met by biodiesel, a fuel made for diesel engines from feedstocks such as animal fats, greases and vegetable oils.
The U.S. goes through 60 billion gallons of diesel annually. In 2007, 500 million gallons of biodiesel were produced. So for the National Biodiesel Board (NBB) to complete its 2015 mission, biodiesel production will have to increase at a 29% annualized clip over the next seven years.
Six years ago, biodiesel production stood at just 15 million gallons, implying a headturning 111% yearly growth rate since. But maintaining the momentum will be tough. The industry faces loud skepticism from environmentalists, who fret about biodiesel and byproducts getting dumped into streams, and economists who question whether biofuels can ever be viable without heavy government support.
So a favorable terrain in Washington will be key, as the biodiesel industry’s biggest players make clear. In its annual report, for example, biodiesel refiner Nova Biosource Fuels warns investors that the “U.S. biodiesel industry is highly dependent on a myriad of federal and state legislation and regulation.”
Full story at Forbes.com
Andrew T. Gillies 