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SuperModels Recent articles: • The rebuilding-Louisiana portfolio, 8/30/2005 • Readers pick 7 stocks with double potential, 8/24/2005 • 18 stocks for the bull market's last gasp, 8/18/2005 More... | SuperModels The rebuilding-Louisiana portfolio (Page 2) of 2  PreviousAfter the big hurricanes in Florida last August, a few of the major mobile-home manufacturers did well as merchandise was ordered for temporary housing. Fleetwood went from $10.60 to $15.50 in a few weeks even though its chart at the start looked dreadful (and strangely enough, much like it does now). In addition to Fleetwood Of course, non-manufactured housing also tends to get a big boost following hurricanes, as we saw with Florida-based resort builder Bluegreen The Mississippi River can get seriously messed up in a big storm, and when the clouds clear engineers may discover that bridges, freeway overpasses and other major pieces of roadway infrastructure must be retrofitted or replaced. A major bridge builder serving the Southeast is small-cap Michael Baker Smaller but still-mighty companies to consider for their ability to either rebuild oil-drilling platforms or roadways are Louisiana-based Global Industries When paying billions isn't all bad One of the most misunderstood aspects of post-disaster reconstruction is the role of insurance and reinsurance companies. At first blush, it always looks as if they get hit hard as investors fret over the losses -- estimated as high as $25 billion with Katrina -- they will be forced to take. But later, these stocks are usually revalued upwards as they exploit the situation to raise rates. If it's too scary to consider an insurer, consider the area's largest insurance brokerage instead, which is the very resilient Florida-based firm Brown & Brown As for those crazy catastrophe bonds, here's the deal. Sometimes companies with potentially major exposure to devastating events such as hurricanes or earthquakes prefer to sell bonds to public investors rather than to buy insurance. These securities, called "cat bonds" for short, pay yields like junk bonds and very rarely result in major payouts, and thus they have become popular among hedge and pension funds who often leverage their bets by buying them with lots of borrowed money. Now here's the catch: If a specific underwritten catastrophe meets a certain loss threshold, such as $10 billion, then the bond issuer does not have to pay back the principal or any more payments. Of course, that's incredibly bad news for the bondholder. We won't know whether any of these bonds will blow up on funds for a few days or weeks, but it is an issue that bears watching, for it could result in a flood of another type -- red ink for owners such as the investment arms of major industrial companies or banks. Fine print To learn more about Beacon, click here. To learn more about Global Industries, click here. To learn more about Entergy, click here. To learn more about Dry Ships, click here here. ... To read my previous column about stocks that could benefit from rebuilding after the Florida hurricanes last year, click here. To learn more about cat bonds, visit this page of a blog run by a Baylor University finance professor. Jon D. Markman is publisher of StockTactics Advisor, an independent weekly investment newsletter, as well as senior strategist and portfolio manager at Greenbook Investment Management. While he cannot provide personalized investment advice or recommendations, he welcomes column critiques and comments at jon.markman@gmail.com; put COMMENT in the subject line. At the time of publication, Markman was long Florida Rock Industries in his personal account.
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