With Trump’s victory, Nebraska investors and businesses are ready for a new era

By November 10, 2016News, Uncategorized

There might be bitter disagreement in some quarters about Tuesday’s election outcome, but many Nebraska businesses and investors expressed optimism about a corporate America they expect to become unshackled from regulations, protected from foreign competition and unburdened from excessive taxes.

 

Investors Wednesday bid up shares of some of Omaha’s biggest companies — Union Pacific, Valmont and Werner, among them — after Republican nominee Donald Trump stunned political convention and won the presidency over Democratic Party rival Hillary Clinton.

 

Stock price gains aren’t permanent — shares could fall today, for instance. Money managers and Wall Street analysts agree that nothing is certain in financial matters. But they also say companies and investors are behaving for now like it’s time to let the good times roll.

 

“Trump’s win, in combination with a GOP-controlled Senate and House, could increase the chances for significant tax reform, tax rate cuts and tax-code simplification,” said Ted Bridges, principal at Omaha-based wealth adviser Bridges Investment Management, which has about $1.8 billion of investor money under supervision. “That would likely be viewed favorably by the capital markets.”

 

It was so viewed Wednesday, insofar as large Nebraska companies were concerned, many of them in heavily regulated industries that might soon be facing some combination of lessened oversight, lower taxes or decreased competition from imports:

 

The stock of Lincoln-based student-loan company Nelnet jumped 8 percent, or $3.18, to close at $42.81 a share. The company earns interest from a portfolio of $26 billion in student loans, and collects a fee for processing student-loan payments on behalf of others.

 

The company, like many involved in financial matters, is subject to regulation under the Dodd-Frank legislation passed during the administration of President Barack Obama after the 2008 financial crisis; the legislation created the Consumer Financial Protection Bureau, with new oversight over debt collectors.

 

Some of the 2008-era reforms might face Trump’s regulatory scythe: Dow Jones reported Wednesday that the president-elect is leaning toward the advice of former Securities and Exchange Commissioner Paul Atkins, an outspoken opponent of a range of post-crisis regulations, particularly the Dodd-Frank financial overhaul and changes to money-market mutual funds.

 

Shares of TD Ameritrade, the Omaha-based employer of 2,000 people that is the largest online stockbroker, climbed 2.4 percent, or 83 cents, to close at $35.30. It also could benefit from loosened financial regulation if Dodd-Frank rules are rewritten or thrown in the dustbin.

 

Shares of ag irrigation-equipment makers Valmont Industries and Lindsay Corp., both based in Omaha, rose. Valmont stock climbed 6.5 percent, or $8.15, to close at $133.40. Lindsay shares were up less than 1 percent, or 60 cents, to $77.69. Factories, like most workplaces, are heavily regulated by federal agencies such as the Occupational Health and Safety Administration and the Environmental Protection Agency.

 

Both companies are also involved in infrastructure — the highways and byways Trump has pledged will get a makeover after decades of neglect — Lindsay with highway lane barriers, Valmont with utility poles.

 

Tony Raimondo Jr., president of Behlen Manufacturing, a maker of metal building and grain-storage bins based in Columbus, Nebraska, said the Trump victory might help all that.

 

He said his company is in negotiations to buy a company that supplies parts to Illinois-based Caterpillar, whose construction equipment would likely be a big beneficiary of new highway, bridge and dam projects. (Caterpillar, for its part, was up nearly 8 percent; Behlen is privately owned.)

 

“We’re excited about infrastructure spending and projects that could stimulate businesses,” Raimondo said. “If Trump follows up on his word, and there’s a lot of stimulus, for manufacturing companies, that might not be a bad thing.”

 

Shares of Omaha-based railroad Union Pacific, employer of 8,000 in Nebraska, rose 3.7 percent, or $3.35, to close at $93.95. The railroad, like all others, has faced almost two years of declining freight shipments from moribund demand. It is also subject to heavy regulation from the federal Surface Transportation Board and the Federal Railroad Administration.

 

Ed Hamberger, president of the American Association of Railroads, said in a statement that the industry hopes Trump “will move quickly on issues such as comprehensive tax reform that reduces the corporate rate, a review and reform of the broken regulatory system and an embrace of fair and open” trade that would benefit both importers and exporters who ship via rail.

 

The railroad industry is also spending tens of billions of dollars on an automated safety system that can remotely stop and slow trains, a system the railroads say is unnecessary, is unproven and won’t prevent most kinds of fatal or injurious accidents. The long-delayed deadline to complete the system could be pushed out even further, or the system could be scrapped altogether.

 

Also, shipments of the bread-and-butter commodity coal have plummeted in recent years with EPA clean-air regulations. Coal might rebound if environmental regulations are rolled back and mining costs fall.

 

Omaha-based trucking company Werner Enterprises rose 2.4 percent Wednesday, or 60 cents, to close at $25.75. The company operates about 7,000 freight trucks subject to regulation by the Federal Motor Carrier Safety Administration.

 

“I think it is a response to the belief that we will be operating in a lessened regulatory business environment,” said Werner Chief Executive Derek Leathers in an interview.

 

Leathers said that he and his industry take their safety and environmental responsibilities seriously but that it will be nice to “digest what is already on the table without having to worry too much about what’s next.”

 

Of course, it all might add up to nothing.

 

Dan Feltz, principal at Omaha-based money manager Feltz WealthPlan, said that although Trump is not a traditional politician, “he will likely share the experience of leaving a fair amount of his campaign agenda undone.”

 

Feltz said checks and balances are an important part of the political system and serve to eliminate extreme views and policies that may make investors nervous.

 

“Further, newly elected presidents tend not to have as much political capital as they think they will, which is one of the reasons they are typically unable to get all of their top priorities accomplished,” Feltz said. “Trump has a narrow Senate majority, won a closely contested election, and the Republican Party, not to mention the Democratic Party, is fragmented, making the policy path more difficult.”

 

And it wasn’t all roses for regional companies. Omaha-based Green Plains, the world’s second-largest producer of ethanol, dropped sharply, shedding 4.2 percent, or $1.05, to close at $24 a share. Industry watchers said a Trump administration could tinker with — or even eliminate — the federal rule called the Renewable Fuel Standard that mandates a certain percentage of the nation’s motor fuel supply be made of ethanol.

 

Todd Becker, president and chief executive of Green Plains, said in an interview that the market moves were misguided — Trump is a strong supporter of ethanol, Becker said. And with Nebraska and Iowa — the two biggest ethanol-producing states — delivering electoral votes for Trump, the president-elect isn’t likely to ravage an industry that provides jobs and a product that is exported globally, Becker said.

 

Wednesday was “a day for the haters that think they have a mandate to make changes” to the Renewable Fuel Standard, Becker said. “We don’t see the same thing in the winds coming out of his campaign,” he said of Trump. Green Plains’ stock still is up nearly 9.5 percent over the past year, outstripping the broader market.

 

Meanwhile, there are tax changes at stake, said George Morgan, a business professor at the University of Nebraska at Omaha; Trump has supported cuts. Morgan said there is an estimated $2 trillion that U.S. companies have stashed in overseas banks to avoid paying what they consider high taxes upon repatriating them.

 

“That could flow back to the United States,” Morgan said. “Also, if corporate earnings are spent on growth instead of going to the government, that could be the trigger to get the gross national product growth rate out of its current stagnation.”

 

The stock market’s final word Wednesday — the broad Standard & Poor’s 500 rose 1.1 percent — was a sharp turnaround from the wee hours. That’s when indications from overseas stock markets and after-hours trading on U.S. markets indicated that Wall Street was headed for a big sell-off.

 

But once the bell rang, things settled — as is often the case when major events meet nervous investors. In early-morning trading, the Standard & Poor’s 500, Dow Jones Industrials and Nasdaq all fluctuated between modest gains and losses. All closed up a little more than 1 percent on Wednesday.

 

World-Herald staff writer Steve Jordon and business editor Brad Davis contributed to this report.

 

 

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