Taking Advantage of Unfortunate Circumstances
By Zachary Valentine and Matthew Vera
It is very unfortunate for all parties and families who are affected by disasters of all types. How society responds in the aftermath, however, greatly affects our economy for years to come.
Disasters come in many forms. There are disasters like the attacks of September 11th, and there are natural disasters such as Hurricane Katrina. Our first reaction is lead with emotion. The adversity of a disaster of any kind will bring out human compassion, empathy and at our firm, prayer.
The second reaction is vital and has been important to our clients throughout the decades. This second response has been looking at businesses and companies that have the capabilities to provide immediate response or cleanup efforts, and who benefit from the rebuilding process. The root of this philosophy came from the research and analytic work of E.F. Hutton in the 1980ʼs.
After September 11th, airport scanners, surveillance systems and family protection became commonplace for households, businesses and our investors.
In the case of Hurricane Katrina, dry wall, construction, cement and basic material companies and their subsidiaries, helped rebuild the New Orleans gulf. These investment vehicles became very timely for all of the investors and the portfolio.
We have already been hearing much about the 2015-2016 El Nino, and the great impact that may ensue. According to the National Weather Service (www.weather.gov), “El Niño has already produced significant global impacts and is expected to affect temperature and precipitation patterns across the United States during the upcoming months.” Additionally, a new report by the Federal Emergency Management Agency (www.fema.com) provides details of “the havoc that ensued during the strongest El Niños of the past, including the 1982-83 event that caused 36 deaths, with the aim of honing current efforts to brace for landslides, flooding and outages.”
It’s important to be prepared for such conditions and to remain safe. These storms are imminent. Let’s not forget that El Niño has already caused major impacts across the world. We have seen unusually powerful hurricanes in the eastern Pacific Ocean, including Hurricane Patricia, which hit Mexico last month.
Northern California, according to The National Weather Service (www.weather.gov), can expect the state to be hit with “mudslides, heavy rainfall, one storm after another like a conveyor belt.” With this information, like Hutton, we are paying attention to the companies that may be positively benefiting from this revenue stream. These companies include natural gas, sand bags, heating homes and businesses, generators, warm weather apparel, medicine and construction equipment. The foundation of this rotation of assets and the thematic approach to looking towards companies with potential huge increases in revenue is dynamic and not a passive approach.
“When E.F. Hutton talks, people listen.”