Essentials, Online Set to Gain When US Equity Trading Resumes: Source
Non-essentials will find themselves pretty low on consumers' lists.
MINYANVILLE ORIGINAL After being closed for two days, the US equity market should prove fairly busy when it reopens on Wednesday, October 31. "In addition to pent up demand, tomorrow is not only the month's end but the close of the fiscal year for many mutual funds," said an East Coast-based hedge fund manager whose residence, in New Jersey, is incidentally without power.
"Right off the bat you can say that essentials will gain, batteries, generators, flashlights, food, home repair," said the source who had relocated to a relative's home. "So, Home Depot (NYSE:HD), Lowe's (NYSE:LOW), and Procter & Gamble (PG), certainly comes to mind."
PG (manufacturer of Duracell) is already in the spotlight due to its better-than-expected third quarter results (on low expectations) and a large stake taken by activist investor William Ackman of Pershing Square Capital, he noted. Ackerman's $1.8 billion investment in the company is, to many, a sign he will push for the company to break up.
Interestingly, it can't be assumed that major regional retailers are automatic gainers, post-hurricane, he said. Walmart (NYSE:WMT) may have seen a bump in pre-storm, stock-up buying, but it also will have missed at least two day's of normal business due to the storm.
On line retailers selling essentials, like Amazon (NASDAQ:AMZN), are bound to be on the side of the gainers, he noted. "If there's something I need that I can't find locally, or think it would be too much trouble to get to, I'm going to be online checking off 'two-day delivery' along with everyone else."
Losers will certainly include anything discretionary, he noted. "Apparel stores, anything selling something you can get by without for now, and through the holidays, are going to hurt not just from the lost traffic, but from the distraction of people concentrating on survival."
Other winners and losers will be those companies which showed substantial gains or losses over the past year. "Since tomorrow is the last day to get their house in order, some fund managers will be shifting money to companies which showed substantial gains--regardless of the industry or any shorter-term reason--and out of the losers. So 'them that gots shall get and them that's not shall lose,'" he said referencing the Billy Holliday song. Those stocks--the longer-term gainers and losers-- ironically, could show the greatest volume over anything storm-related in trading when it resumes tomorrow. "Normally, fund managers like to do these transactions over a couple of days, but the storm has made it impossible, they don't have the luxury of time. Tomorrow is do-or-die if they want to erase the losers from their prospectus," he said.