A Nigerian man with links to al Qaeda militants was charged for trying to blow up a U.S. passenger plane with an explosive device on approach into Detroit. What does it mean for the market and will we see a “terror premium” priced into some stocks? Brian Ruttenbur, homeland security analyst at Morgan Keegan, shared his insight.
“There is a terror premium in the market right now, but it just started," Ruttenbur told CNBC. "Historically, when you go back to 9/11, the group was up 250 percent on average in the first 90 days, but right now, we only have a 5 to 7 percent premium.”
Ruttenbur said the companies getting the premiums are inspection equipment makers, technology providers to homeland security and explosive detection machine firms.
“What we’ve seen over the last nine years is with failed attacks, you have a couple days of rapid movement where the stocks that could potentially be beneficiaries from an attack go up 5 to 15 percent, and then when congress does nothing and there’s no other follow on attacks, the stocks come back down,” he said.
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- Watch Ruttenbur's Previous Appearance on CNBC (May 28)
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Ruttenber has investment banking clients who own shares of OSIS, LLL, ASEI and ID.