A year ago today, Occupy Wall Street hit New York City to make a statement on a litany of modern economic issues, ranging from income inequality to student loans to organized labor.
Less than a month later, we created The Occupy Wall Street Index to track the performance of the companies that the self-proclaimed 99% love to hate. (See: The Occupy Wall Street Index: 9 Companies the 99% Loves to Hate.
The goal was to take an admittedly non-scientific look at whether companies that behave badly reward investors.
The Index consisted of nine companies, some of which were being directly targeted by the protestors, like JPMorgan
(NYSE:JPM), Goldman Sachs
(NYSE:GS), News Corp.
(NASDAQ:NWSA), and General Electric
We also took a look at companies representing issues the Occupy Wall Street movement cares about. We selected McDonald's
(NYSE:MCD) for income inequality (according to the BLS, fast-food cook is the worst-paying job in America), Wal-Mart
(NYSE:WMT) for organized labor, and SLM Corp.
(NASDAQ:SLM) for student loans.
The index was rounded out by serial polluter BP
(NYSE:BP) and defense contractor Lockheed Martin
So what happened? Did it pay off to bet on these supposed bad guys of corporate America?
Well, as it turned out, The Occupy Wall Street Index returned 26%, outperforming the S&P 500
(INDEXSP:.INX) by about 5.5 percentage points.
Click to enlarge
Let's take a look at what drove the big upside.
Interestingly enough, the best performer in the Index was News Corp., which has come under enormous scrutiny in the past year over the UK phone-hacking scandal. Chairman and CEO Rupert Murdoch, however, survived the intense media and political scrutiny to announce a split of the company, a move that was very well-received by investors, who have sent the stock up a whopping 44%. (See: News Corp. Split May Make Disney Last Media Tycoon
.) Wal-Mart was the second-best performer, up 42% as it finally broke out of a decade-long trading range between $50 and $60.
JPMorgan also impressed, returning 23% despite the heat of the infamous London Whale Fail scandal, which lost steam when Congress and the Senate Banking Committee couldn't come close to landing a knockout punch on CEO Jamie Dimon. (See: Fox Watching Chicken Coop? Senate Banking Committee and Dimon
On the negative side, McDonald's returned just 4% as a string of disappointing sales numbers have dragged down the stock of what was once an incredibly strong multi-year growth story. We also saw middling performances out of BP and Goldman Sachs, both of which underperformed their solid sectors.
It's funny. According to a recent Goldman Sachs study, a full 89% of hedge funds are underperforming the S&P 500 this year.
Maybe some of those folks should head down to Zuccotti Park today and read the signs.
No positions in stocks mentioned.
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