A large reverse stock split and a higher profile on the Nasdaq exchange pushed longtime laggard Syntroleum Corp. to the top-performing Oklahoma stock in the first half of the year.
Syntroleum shares rose almost 73 percent from the beginning of the year through the end of June. The Tulsa-based company manufactures synthetic fuel. In all, three-fourths of the public companies tracked by The Oklahoman posted higher share prices in the first half of the year.
The laggards were led by Oklahoma City-based SandRidge Energy Inc., whose stock fell 25 percent through the end of June. It was joined by several related trusts, including SandRidge Mississippian I and II and the SandRidge Permian Trust. Units in those trusts dropped between 13 percent and 23 percent for the first six months of 2013.
The Dow, Nasdaq and S&P 500 indexes all posted gains of more than 13 percent for the first half of the year. That was despite some volatile trading days in May and June, said Greg Womack, an investment adviser in Edmond. Womack said the stock market has advanced higher in the last couple of years, mostly from injections of liquidity by the Federal Reserve and from low interest rates.
“As a result, interest-bearing accounts and bonds are paying low yields, forcing investors to flock to dividend-paying stocks, including energy stocks that produce higher income streams, such as master limited partnerships, for increased income and yield,” said Womack, who runs Womack Investment Advisers Inc.
Womack said recent market volatility can be traced to signals from the Federal Reserve that it may start curtailing its monthly bond purchasing program under quantitative easing. He said a strong dollar has helped keep oil prices in check despite concerns over Middle East supplies.
“As long as the Fed keeps providing liquidity with asset purchases and keeping interest rates at low levels, there are not a lot of places for investors to go other than the stock market for any kind of growth and/or yields,” Womack said.
As its stock traded below $1, Syntroleum had a 1-for-10 reverse stock split in the second quarter to remain listed on the Nasdaq exchange. On a split-adjusted basis, shares went from $4 at the end of December to $6.90 by the end of June. That likely increased its visibility to investors, said Tulsa money manager Jake Dollarhide, CEO of Longbow Asset Management.
Led by a rebound in the economy, Tulsa-based air conditioning manufacturer Aaon Inc. was the second best-performing Oklahoma stock in the first half of the year. Aaon shares increased 59 percent in the first six months of the year as it went from almost $21 a share to $33 at the end of June.
Aaon makes residential and commercial heating and air conditioning equipment for the replacement and new construction markets. Dollarhide said the company is likely benefiting from new orders from companies that put off buying replacements for their heat and air systems during the recession.
Access Midstream Partners LP, which bought natural gas pipeline, compression and storage facilities in several major shale plays from Chesapeake Energy Corp., rose 42 percent in the first half of the year. It was among several midstream companies posting large gains, including Blue Knight Energy Partners, NGL Energy Partners and Magellan Midstream Partners.
Oklahoma City-based drive-in chain Sonic Corp. rose 40 percent in the first six months of the year. It started the year at $10.41 per share, but ended June at $14.55. Dollarhide said Sonic fills a unique niche among fast-food restaurants. Its stock suffered during the recession as consumers sought value-menu items at competing restaurants. With a rebounding economy, he said consumers are willing to pay a little more for creative menu items at Sonic.
“The economy is recovering and consumers have a little more discretionary income,” Dollarhide said. “As a regional chain, they're also big in states with stronger economies, like Oklahoma and Texas.”
With a boardroom shake-up and the eventual resignation of CEO Tom Ward, shares of SandRidge fell 25 percent in the first half of the year. Dollarhide said new management hasn't translated into stock gains, at least so far. “With a new management team, it may take a while, but I wouldn't be surprised to see a resurgence in the stock,” Dollarhide said. “It's now being run by people with a private equity background, and hopefully the company can put the controversy behind it.”
Other large energy companies in Oklahoma City had a mixed first half of the year. Chesapeake Energy shares rebounded in the first quarter but were flat in the second quarter. The company's shares rose from $16.60 at the beginning of the year to $20.38 at the end of June.
Continental Resources Inc. was up 17 percent in the first six months.
Devon Energy Corp. rose 8 percent in the first quarter, but erased those gains in the second quarter. It essentially ended the first half of the year at the $52 per share price it posted at the beginning of the year.