Spector™ Spotlight: Backing B’ham

Research Spector Spotlight

Why Invest in Birmingham?

With the recent purchase of Energen by Diamondback Resources for $8.2 billion, it seemed like a perfect time to put the spotlight on one of my favorite Spector™ funds, “Backing B’ham.”

At DreamWork, it’s all about giving our clients what they want, and clients want to invest in their community. Whether it is college football, American Idol or just local business, the citizens of Birmingham, Alabama are a very loyal and supportive community. With all the recent attention on sustainability and the greater good, I believe investors also want ways to support the companies that give back to their city.

Which companies provide value in Birmingham?

From Birmingham’s early days as the “Steel City” to its modern day setting as a medical and financial powerhouse, there are lots of reasons for people to be bullish on Birmingham. And who knows, with a renewed government commitment to manufacturing steel again in the US, Birmingham could be positioned for growth in that industry again as well.

When I designed “Backing B’ham” I wanted it to reflect the corporate nature of the city. It is heavily weighted in the financial sector with plenty of medical and materials exposure. It also includes other sectors such as energy that help further represent the corporate diversity that defines the “Magic City.”

And with all the talk about value stocks lately, “Backing B’ham” could check off the boxes of what you are looking for in an investment. Financials, healthcare and energy are often places investors look for value in uncertain market conditions.

What makes investing in Birmingham so attractive?

The main thing to watch when investing in Birmingham companies is that they are often acquired. As seen with Energen, Birmingham is often ripe for corporate takeovers. Off the top of my head, I can think of several companies who have been taken out in recent years: Protective Life, Walter Energy, Infinity Property, Golden Flake and even Zoe’s Kitchen. This is often great news for investors in those companies as the price that the acquirer pays is usually a significant premium to the current price. While Birmingham ranked as number one on the “most affordable cities” list for consumers according to Forbes, its companies may also rank highly on a most affordable corporations list.

So, if you love Birmingham and have been looking for a way to invest in the companies that support the city, or if you are a value-oriented investor attracted to the mix of stocks based here, look no further than “Backing B’ham.”

As always, please let me know if you are interested in “Backing B’ham” or have an idea of your own. I’d be happy to hear from you. Check out some of our other Spector™ Spotlights here. Stay tuned for our new website launching in the near future where you can explore all our Spector™ and Tempo™ Funds.