You Get a Dividend, You Get a Dividend, You Get a Dividend!

February 02, 2018 | Julianna Paterra, CFA, CAIA, Research Analyst

As January closes, it is not uncommon for New Year’s resolutions to go up in smoke; one publication has suggested that as many as 80% of commitments for change are gone come February.¹ Regardless, many such resolutions target weight loss in the New Year, and an obvious winner in this game would seem to be Weight Watchers. However, January’s performance for this stock appears surprisingly unrelated to news of increased subscribers. Instead, it appears that the influential figurehead Oprah Winfrey had an unanticipated — and unconventional — impact on Weight Watcher’s January performance.

Since Oprah took a 10% stake and joined the board of directors at Weight Watchers in late 2015, her $43 million investment has grown to exceed $400 million. Compare that 847% growth to the S&P’s 39% increase and the Oprah effect cannot be denied. Her powerful speech at the Golden Globes on January 7th incited social media to explode with excitement over a theorized 2020 run for the presidency. Weight Watchers shares jumped over 12% the Monday following her speech and an additional 9% the next day; the stock continued to climb through January, though this was likely due to more typical reasons such as the company’s strong growth outlook. Once news broke on the 25th that Oprah was officially not planning to run for president, shares tumbled 7% intraday and ended the month down 5% from their January peak.

An announcement from a board member regarding a lack of intent to run for president is certainly not a typical cause for a depression in stock price, and this situation is only a recent example of the growing importance of a company’s brand. Stock prices are no longer solely affected by their fundamentals; a seemingly unrelated blip in the news cycle can now blow up on social media and essentially override a company’s true fundamentals to impact its share price. While an event like this can be unpredictable, it forces management across all industries to have a stronger brand awareness, which is ultimately a good thing as it can lead to increased responsiveness to consumer feedback. As it relates to portfolio management, actively managed funds that can successfully account for this trend are more likely to outperform both their peers and respective indices. As capital markets unfold in 2018, this is a pattern that bears watching.

Print PDF

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Julianna Paterra, CFA, CAIA
Research Analyst

Get to Know Julianna

Related Content

Chart

07.19.2018

Do Rising Rates Mean Lower Returns for EM Equities?

Rising rate environments are typically thought to put downward pressure on equity returns. Specifically for emerging market (“EM”) equities, the…

07.13.2018

Goodbye Telecommunications Services Sector and Hello Communications Services Sector!

On November 15, 2017, S&P Dow Jones Indices, a leading provider of financial market indices, and MSCI Inc., a leading…

07.02.2018

2018 Halftime Market Briefing

Live Webinar – Thursday, July 19, 2018 – 1:00-2:00 PM CT  

06.27.2018

Is Emerging Markets Debt Oversold?

Almost halfway through the year, emerging markets debt (“EMD”) returns are negative for the year, due to a variety of…

06.20.2018

The ECB Ends QE

Late last week the European Central bank (ECB) announced an end to its quantitative easing (QE) program. Over the last…

06.14.2018

Do Private Markets Offer More Attractive Opportunities?

Across the private equity industry, valuations have continued to trend higher over the past few years with U.S. buyout valuation…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >