Chris Nichols

March Madness Is for Hoops — April Madness Is for CBS Stock?

For college basketball fans, there's pretty much nothing better than the three-week period from the middle of March through the first Monday in April that's known as March Madness.

The 2012 tournament is kicking off this week, and men's teams from around the nation will start their bids to win six (or seven if you count the play-in teams) games in a row and cut down the nets in New Orleans. If your interest is only in the basketball, who can blame you? The NCAA Tournament is as good as it gets. But we might have something for the investors out there, too.

March Madness has been closely tied to CBS (CBS) for three decades, and with that in mind, we decided to take a look at the performance of the network's stock surrounding the tournament in recent years. With respect to the March part of March Madness, we wanted to examine some of the stock movement before and after the tournament as well, so we also looked at February and April trends.

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A few interesting points turned up, not the least of which is that, for CBS shares, the month of April has been the big winner of late, and has in fact gained for that month in six straight years.

To begin, we went back to the 2000 tournament. Viacom (VIA) and CBS agreed to merge in 1999, so we started with the following year's edition. For 2000 through 2005, we examined Viacom's stock, since it owned the CBS network. Viacom later split off CBS, making the data from 2006 through the 2011 tournament for the current CBS Corp. (A caveat: CBS and Time Warner's (TWX) Turner Sports signed a multiyear deal to carry the tournament beginning in 2011, but we're sticking with CBS only because of the network's long association with the Road to the Final Four.)

Going back 12 years, February has been a loser two-thirds of the time for the shares of the company that owned the CBS network, with only four of those months ending with the stock higher than where it exited January. March has been better, with seven of the 12 months in positive territory. But April is in a class by itself, with nine of 12 months seeing gains -- with an average increase of more than 17% in the months when the stock has risen. What has to be noted here is that the data are skewed by an outsized gain in April 2009. The stock fell hard in the preceding months and then rebounded sharply. As a result, CBS shares were up 83% during the month. Removing that year and counting the other eight up Aprils, the average gain was 8.9%.

April was also the least painful for those months when the stock fell, averaging a decline of 1.4%. We found that March (*see note below) averaged a 5.5% gain for its up months and a decline of 4% for its down months. Even though February had the fewest positive months, the average gain of those was 9.2%. However, the declines were the worst, generally at 8.6%.

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Looking at the longer term, CBS hasn't moved a great deal since it parted ways with Viacom. The stock was around $27 in January 2006, and on Monday of this week it closed at $30.56, for a gain of about 12% or so in six-plus years. However, if you measure from its sub-$4 low in March 2009 and you bought shares then, you've made about nine times your investment. This March, the stock is up about 1% for the month to date.

We all know that past performance is no guarantee of future results, so what's the takeaway? Altogether, 20 of the 36 months in the survey were positive, a rate of 56%. Probably about like your tourney picks. As for what's next, you can't predict these things. If you could, everyone would be a stock market genius, and everyone would have a perfect bracket.

* Viacom historial data are from FactSet. CBS data from 2006-11 are from FactSet and Yahoo! Finance. February was calculated as the closing price on the last trading day of January to the closing price on the last trading day of February. March was calculated as the last trading day of February through the last trading day of March for 2000-05. For 2006-11, March also includes the first full week in April (to capture the entirety of the tournament). April represents the last trading day of March through the last trading day of April. So April has a crossover week in the past six years, reflecting the Final Four weekend and the championship game itself.

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