“And I can’t deny the fact that you like me. Right now, you like me!”
Some may recognize the above quote from Sally Field’s Oscar acceptance speech in 1985 (which differs somewhat from the apocryphal but far more recognized “you really, really like me” version that’s shadowed her for years). But it could also apply to the rising number of businesses that have found a welcome home in Texas.
In short, it’s hard to deny the fact that corporate America, right now, really likes the Lone Star State.
This week’s cover story, which spotlights the top 150 companies in the Dallas-Fort Worth area, gives us an opportunity to delve into some of the reasons why Texas’ dynamism has placed the state near the top of the economic league charts.
Drilling even further down, the D-FW 150 is a portrait of a region in transition, with industries like health care, transportation and artificial intelligence dominating the rankings in a state more broadly defined by energy and agriculture.
As any smart investor will attest, the key to earning high returns and smoothing out volatility and downside risk in any portfolio is diversity. At a late September fireside chat in Westlake, Gov. Greg Abbott boasted that “one thing that Texans have strived to achieve over the past decades is to make sure that the state grows more and more diversified.”
Abbott told an audience assembled at the Texas Economic Development Corporation that “there’s no state in the United States that has a more diversified economy.”
With a business-friendly environment and business court that’s fashioning itself into a competitor of Delaware’s Court of Chancery, the elements underpinning Texas’ economy are partly behind why firms like The Free Markets exchange-traded fund (FMKT) was one of a handful of companies that lined up to promote the New York Stock Exchange’s newly inaugurated Texas platform.
Although the benefits of a domestic company being dual-listed on the same exchange are very much an open question, the team behind FMKT extolled the virtues of the Lone Star State.
“Six of our holdings are based in Texas. Two out of our top three are based in Texas. It’s about 14 or 15% of the portfolio,” Joe Castiglie, one of FMKT’s portfolio managers, told The Dallas Morning News in an August interview. He cited the state’s “very business-friendly” policies as being congruous with FMKT’s deregulation and free markets bent.
“One of the reasons we listed with NYSE to begin with is because … what conveys [free market] imagery more than the stock exchange, and then thinking about how that overlaps with our holding companies that are within the portfolio that are based in Texas. It just seemed to make a lot of sense to us,” Castiglie added.
And Hal Lambert, a Dallas-based portfolio manager at Point Bridge Capital who serves as a sub-advisor to the FMKT, cited the large numbers of investors “and the pools of capital available in Texas” as driving its decision to dual-list.
The fund is far from the only one. Asset management giant BlackRock — which manages nearly $400 billion worth of public companies in Texas — recently showed why they ‘really, really like’ Texas by creating an ETF dedicated solely to Lone Star State assets.
To be sure, the state’s momentum is showing a few signs of wear, but its greater-than-$2-trillion economy is still poised to vault it into Group of Seven territory.
“When Texas secedes from the Union, it’ll be a foreign country, so we’ll be ahead of the game on that,” Lambert joked.