Magellan Petroleum was 1 of 3 gushers in markets
U.S. stock markets got off to a miserable start in 2016, were plagued with disappointing earnings and were blindsided in ways that should have sent them spiraling lower still.
Yet, they found a way to shake it off and end the year with solid gains, a pattern followed by an index tracking Colorado stocks. A few Colorado stocks made dramatic turnarounds.
“There is a lot of money out there still, courtesy of the central banks and a psychological attitude that there is no alternative to stocks,” said Andre Ratkai, chief investment officer with the Praxis Advisory Group in Greenwood Village.
The Bloomberg Colorado index, a basket of 72 stocks based in the state, rose 4 percent over the course of the year. That lagged the Dow Jones industrial average, up 13.4 percent; the S&P 500, up 9.5 percent; and the Nasdaq composite, up 7.5 percent.
Ratkai said some of the events that could have derailed the market but didn’t included Britain’s vote to leave the European Union, Donald Trump’s unexpected presidential win, and a sharp rise in interest rates at year’s end.
The state’s top performing stock in 2016 was Magellan Petroleum, a Denver-based oil and gas firm left for dead. Magellan shares, which could be had at the end of last year for 54.8 cents, ended trading Friday at $11.25, a gain of 1,948 percent.
Magellan shares started tracking the rebound in oil prices early in the year, but found a new lease on life when a new Houston firm, Tellurian Investments, proposed a merger.
Tellurian is developing natural gas liquefaction facilities along the Gulf Coast. Magellan shares received another big boost Dec. 20, when French petroleum giant Total said it would buy a 23 percent stake in Tellurian.
An investor with a strong enough stomach to put $10,000 into Magellan a year ago would now be holding shares worth $204,545.
Shares of Resolute Energy, a Denver oil and gas exploration company, also had a big year, rising 846.9 percent after what investors perceived were some smart moves in the Permian Basin in Texas, considered the country’s hottest drilling plays right now.
Westmoreland Coal was another Colorado company on the outs that managed to stage a big rebound. Its shares rose 200.5 percent.
One company that couldn’t just “shake it off ” was Chipotle Mexican Grill, which ended the year down 21.4 percent despite various efforts to restore its reputation and win back customers following food contamination problems in late 2015.
The state’s worst performing stock last year was Louisville-based Real Goods Solar, a solar-panel provider whose story provides a caution against blindly investing in the big losers from the previous year.
Real Goods shares dropped 98.1 percent in 2016, after a 93.5 percent decline in 2015, which followed an 84 percent drop in 2014.
And not all petroleum companies tracked with the energy rebound that followed a doubling of oil prices since January. Shares of Denver-based Bonanza Creek Energy were down 80.7 percent in 2016. They took a big hit right before Christmas after the company said it had reached a deal with creditors to wipe out $850 million in debt in return for giving them 95.5 percent of the equity in the restructured company.