Wednesday, April 11, 2007

A Happy Birthday For The Forbes Beltway Index

A year ago this week, debuted the Forbes Beltway Index, our means of tracking the stock market fortunes of just over 100 public companies that either do significant business with the federal government or benefit from federal law.

One rationale for the index is that a solid business rapport with Uncle Sam is a positive indicator for investors. Federal statutes, for example, occasionally shield companies from competition. And big contractors can depend on a steady flow of government dollars when the private-sector business cycle turns down.

So far, the Forbes Beltway Index hasn't disappointed us. On a 52-week basis, through Monday's market close, the index has gained 14%, three points ahead of the Standard & Poor's 500.

We're not claiming here that an investor hitching a ride on the Beltway Index would have necessarily enjoyed that 14% increase. Unlike the Dow Jones industrials or the S&P 500, there are no mutual or exchange-traded funds tracking it. Trading expenses would have taken a bite out of performance.

Note also that in the course of the year, we made a few changes to the Beltway Index roster to keep it up to date with the latest federal contracting information and movement among the defense companies appearing on our own Forbes lists.

Still, here's a look back at the first year's winners and losers. In the former category, a notable is Horizon Lines, the Charlotte, N.C.-headquartered shipping concern. As the company acknowledges in its filings, a key to Horizon's business is the Jones Act. That protectionist federal law requires that vessels transporting cargo between certain ports be built in the United States, be manned by predominately U.S. crews and be owned by U.S. businesses.

Full story at