Five interesting things that Hodges Capital research analysts discovered this week...

#1 NATURAL DISASTER: In the 1980s, the U.S. experienced about three natural disasters per year that caused damages of at least $1 billion each. In the 2010s, that climbed to 13 per year, according to the National Oceanic and Atmospheric Administration.  Last year, the U.S. endured a record 28 disasters that caused at least $1 billion in damages each.

#2 USED STUFF: A recent article on Chartr indicated that U.S. desktop visits to Facebook Marketplace increased by 15% in February versus a decline of 4% on the company’s social network. Marketplace is capitalizing on the growing popularity of buying used stuff, especially among young people who are concerned with sustainability and likely short on cash. According to the Harvard Business Review, the U.S. resale market was worth about $175 billion in 2023. 

#3 BIG APPLE: According to Bloomberg, Apple Inc. announced the biggest U.S. buyback ever, saying its board approved an additional $110 billion in share repurchases. Apple owns six of the ten largest share repurchase announcements of all time. According to MarketWatch, Apple has reduced its share count by 37% over the last ten years.  

#4 KNOW WHAT YOU OWN: Investors remain concerned about commercial real estate risks (CRE) due to higher interest rates and changes in how Americans work. Publicly traded banks with higher concentrations of commercial real estate have underperformed their peers with a lower exposure level. CRE risk depends on more than just loan concentration. Key factors include a Bank’s underwriting, willingness, and ability to monitor existing borrowers, location and property type, and the capital and loan loss reserves it holds against potential losses. According to research at the Federal Reserve Bank of Kansas City, expected default rates on office properties are correlated with the size of the office building. The expected probability of default is nearly 25% for the largest office properties (those with more than 500,000 square feet).

#5 TRIPLED IN SIZE: According to Pollstar, ticket sales for live comedy shows have tripled in the last ten years. Gross ticket sales in 2023 were more than $900MM. Netflix played a significant role in increasing awareness of comedic acts and funding new stand-ups. According to Bloomberg, Netflix will stage roughly 500 live shows across over a dozen venues starting in May.

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