Op-Ed: Investing in Puerto Rico, investing in your future
We can all safely say that Puerto Rico’s great economic experiment began taking shape last year, marked by three extraordinary events. Our experiment starts with the earthquakes in the southern part of Puerto Rico that continues to affect thousands of lives from leaving children without schools to shuttering business to affecting the mental health of thousands.
If that alone was not enough, the COVID-19 pandemic rapidly followed during March 2020 and is the biggest exogenous shock the world has ever seen outside of World War II.
The silver lining for Puerto Rico appears to be the new policies implemented by the Biden administration that are less discriminatory in terms of funding flow when compared to the Trump administration. Please make no mistake. No one is pleased with the delays in implementing reconstruction funding from Hurricane Maria, now in its fourth anniversary.
The widespread impact from the earthquakes and the pandemic of COVID-19 placed Puerto Rico into lockdown, suspending most commercial and forcing 43% of all businesses to close 100 days or more during 2020. The granting of federal funding and the ensuing recovery under the Trump administration had been slow, and in most instances, it blocked the very help Congress had approved.
Puerto Rico’s economic progress continues to lag with all the chaos and uncertainty of COVID-19 as it spreads through the island. The result is that all the federal funding has been implemented from early 2021 continuing to 2022.
The $15 billion capital infusion to the Puerto Rican economy is the largest funding allocation in history. Its impact on the local economy becomes a tremendous economic experiment in its own right.
As we revise the $15 billion already in our economy, we note the main categories that include,
- Income support 38.7%,
- Loan programs 21.3%,
- State & Local funding 27.3%
- Other uses 12.7%.
Also, Puerto Rico has received additional funding from the $1.9 trillion stimulus package; when added all told, Puerto Rico faces the most significant economic experiment in its history.
As the experiment impacts the Puerto Rico economy, the best reflection of these federal inflows has its way into Puerto Rico’s five public corporations. We have a group as the Birling Capital Puerto Rico Stock Index.
What is the Birling Capital Puerto Rico Stock Index?
The Birling Capital Puerto Rico Stock Index is a market value-weighted index composed of five (5) companies with headquarters and/or primary domicile in Puerto Rico. All companies are listed on the national exchanges.
The Birling Capital Puerto Rico Stock Index began 2021 with a bang, with the five companies that make up the index rising to lofty levels as most are viewed as in a much better position as we wrap up the pandemic. To highlight each of the stocks, we make a collective and individual comparison of each Birling Capital Puerto Rico Stock Index component versus the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite from 01/1/21 to 9/29/21.
Now let’s look at the Birling Capital Puerto Rico Stock Index Individual firms, their returns, and stock prices and ranking them according to their performance:
- Triple S Management (GTS): has achieved a yield of 65.62%, surpassing the Birling PRSI, Dow Jones, S&P 500, and Nasdaq, with a price per share at the close of 9/29/21 of $35.36, rising $14.01 per share. The Triple S stock price rise is due mainly because of the recent acquisition announcement by GuideWell.
- First Bancorp. (FBP): has achieved a return of 45.01% exceeding the Birling PRSI and the Dow Jones, S&P 500, and Nasdaq, with a price per share at the close of 9/29/21 of $13.37, rising $4.15 per share.
- Popular Inc. (BPOP): has achieved a return of 39.56%, lagging the Birling PRSI and exceeding the Dow Jones, S&P 500, and Nasdaq, with a price per share as of 9/29/21 of $78.60 rising $22.28 per share.
- OFG Bancorp (OFG): has achieved a yield of 38.40%, lagging the Birling PRSI and exceeding the Dow Jones, S&P 500, and Nasdaq, with a price per share as of 9/29/21 of $25.66 rising $7.12 per share.
- Evertec Inc. (EVTC): achieved a yield of 20.22% below the Birling PRSI, higher than the Dow Jones, S&P 500, and Nasdaq, with a price per share at the close of 9/29/21 of $47.27 rising $7.55 per share.
The Birling Capital Puerto Rico Stock index has a return YTD of 43.18%, a return 249% higher than the Dow Jones, 168.8% higher than the S&P 500, and 242.6% higher than the Nasdaq Composite.
In conclusion, we firmly believe Investing in Puerto Rico is investing in your future. While no one can dispute that our public companies are doing quite well, there is an underlying issue that we must also fix and discuss to make sure we take care of all Puerto Rico constituents. To that end, we must also examine the stark differences in Puerto Rico regions’ per capita income and take a deep look into these differences below.
We have lost more than 215,00 residents, a trend that continues, although at a lesser rate. The migration pattern was evident in the 2020 Census, which showed that our population went from 3,726,157 mm in 2010 to 3,193,694 in 2020, a 14.30% reduction or 532,463 fewer Puerto Ricans living here. We only must look at this map of Puerto Rico below with an imaginary line in red that draws the stark differences in per capita income, showing that there are two different Puerto Ricans.
Inequality in an issue Puerto Rico needs to fix
We must only look at this map of Puerto Rico below with an imaginary line in red that draws the stark differences in per capita income, showing that there are two different Puerto Ricans. The lowest median household income is Aguadilla with $15,303 or $7.97 per hour and the highest in the San Juan region with $26,235 or $13.66 an hour; simply no one can make a decent living at $7.97 per hour or $13.66 per hour.
For that reason, we completely support the newly approved raise minimum wage to $8.50 in January 2022, $9.50 in July 2023, and $10.50 in July 2024. We must create a long-term plan to develop a path to create a higher density of new higher-paying jobs with an extensive array of industries.
There is no question Investing in Puerto Rico is investing in your future!