We’ve still got March Madness fever over here. Can you blame us? The NCAA Men’s Basketball Tournament is in full swing, and with Brexit delayed and earnings season still several weeks away, it’s as good a time as any to take a break from the heavy markets analysis.
So, we thought we’d do something a little different today. Rather than impart some investing wisdom that can glean from the NCAA Tournament, this week we are going to have some fun comparing teams in this year’s tournament field to stocks. This is my one shining moment. Let’s do this.
Two historically dominant entities having a tough year relative to expectations.
From 1907 to 2018, General Electric was a continuous member of the Dow Jones Industrial Average. But decades of ill-advised spending and an over-leveraged balance sheet have left the company in shambles. In the midst of a dividend cut to $0.01 and several asset sales, shares of GE are at 10-year lows.
Kansas’ troubles haven’t been quite as dramatic, and yet the 2018-19 season certainly qualifies as a “down year” for the blue blood. For the first time since 2004, the Jayhawks did not finish first in conference play. And while the school finds itself in the tournament for the 30th straight year, their No. 4 seed this year is the school’s lowest seeding since 2006. Of course, all that will be forgotten with a national championship.
On the contrary, 2018-19 has been an extraordinary time for fans of these two. On Jan. 21, the Volunteers were officially ranked No. 1 in the nation—the first time since 2007 the team had reached that status. Their 29 wins this year are the most for the program since 2009-10, and their No. 2 seeding is the highest since 2008.
And speaking of comebacks, New York Times shares are at a 14-year high. Whether you want to ascribe the performance to the charged political atmosphere or the company’s transition from print to digital, it’s hard to argue against a trend like that.
Are there hotter newcomers than these two? In just three years Canopy Growth has gone from penny stock to a company worth more than $10 billion. Thanks in part to a $4 billion investment from Constellation Brands (STZ) in August, it’s the most valuable publicly traded cannabis pure-play.
The same can be said for Buffalo. The Bulls only became a Division I program in 1998 and have won their conference tournament four out of the last five years. As a No. 6 seed in this year’s tournament, they represent a trendy mid-major pick to potentially advance to the tournament’s second weekend and beyond.
This comparison is more about leadership than anything. He may no longer be CEO, but there are few people more synonymous with a company that Bill Gates is to Microsoft. The same goes for Tom Izzo who, having been the Spartans’ head coach since 1996, is the fifth-longest tenured basketball coach in Division I.
Besides, both hit new highs at the turn of the century. Shares of Microsoft spent late-1999/early-2000 at or near then-all-time highs before falling off significantly during the dot com crash. In 1999 Michigan State won a program-record 33 games, and their 2000 National Championship remains their most recent.
What a back-and-forth few years it’s been for these two.
In 2013 the Cardinals were led by their Hall of Fame head coach Rick Pitino to a third national championship. Four years later, a recruiting scandal caused the school to fire Pitino and vacate four years’ worth of wins, including that 2013 title. Now with new coach Chris Mack and in the tournament for the second year in a row, Louisville looks to be back among the elite programs in college basketball.
Remember when Chipotle was one of the spiciest names on Wall Street? The stock rose from $36 to $758 from 2008-2015, an increase of 2,000 percent. But after several instances of food-borne disease outbreaks between 2015-2018, the stock fell as much as two-thirds to $247.
Those fears appear to be behind investors, however, as the stock is back to knocking on the door of $700.
Could it be any other way? Mike Krzyzewski is the Elon Musk of college basketball. Or maybe Musk is the Coach K of Wall Street…
In any case, there are few people in America who are simultaneously as loved and reviled by as many people like these two.
It’s hard to argue with the results. Since taking the Duke job in 1980 no program has won more national championships—and become more loathed— than Duke (though archrival North Carolina has also won five in that span).
And Musk, for all his bravado and questionable public statements, has built Tesla into one of the largest electric vehicle manufacturers in the world from scratch. The first Tesla Roadsters weren’t released until 2008, and in just 11 years the company has developed four new models and growth to be worth $49 billion (though skeptics will point to the company’s inability to scale production, liquidity issues, and the ongoing SEC investigation of Musk as reasons to avoid the stock).
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