THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : VIEW FROM THE STREET : A Search for Value : Not Suprisingly, Thrifts Crowd List of Lowest-Priced Firms

Like comedian Rodney Dangerfield, many California companies get no respect--from Wall Street.

For a variety of reasons, investors have stayed away from these companies. In some cases, these “lowest-priced” companies, as measured by the market value-to-book value ratio, are still haunted by past failures. Sometimes, investors have good reason to be wary.

(The combined worth of a company’s stock determines market value. Book value is the value that a firm’s assets are carried on its balance sheet.)

“They may be undervalued or they just might be lousy values,” said Kevin Colosimo, vice president of MZ Group, which compiled The Times lists of highest- and lowest-priced companies.

Savings and loans account for 11 of the 25 lowest-priced firms. S&Ls; have generally fared poorly when market and book value are compared. The books of many S&Ls; carry low-rate mortgages made 20 years ago that are now worth much less, given higher interest rates. S&L; stock prices in general have been hurt by the problems of a relative few. And while many institutions have continued to grow and remain profitable, they have suffered on Wall Street.

“These are bad times for S&Ls; and the good guys are being punished along with the bad guys,” said Allan G. Bortel, a savings and loan analyst with Shearson Lehman Hutton. “It does hurt them when they try raising new equity capital.”

But, Bortel said, “it doesn’t hurt their basic business otherwise. Their average customer is not looking at the company’s stock price.”

Columbia Savings & Loan Assn., for example, ranked No. 89 on The Times 100 return-on-equity list, but topped the list of lowest-priced companies.

Investors may be wary of Columbia’s heavy investments in high-yield “junk bonds” and commercial real estate. In early April, company officials said federal investigators were looking at whether the company took part in an illegal trading scheme with the junk bond department at Drexel Burnham Lambert.

Industry analyst Gerlad S. Haims at Seidler Amdec, a Los Angeles brokerage, said there is some concern that federal legislation could force S&Ls; like Columbia to beef up its traditional home-mortgage business at the expense of its investments in junk bonds and commercial real estate.

A troubled past continues to haunt some companies. One victim is Tosco, which despite recent financial improvement, was ranked 12th on the lowest-priced companies list.

In the early 1980s and late 1970s, the Santa Monica-based company converted shale into oil. But the process took longer than expected--a drawback in an environment of falling oil prices--and Tosco entered the oil refinery and distribution businesses.

In 1984, its stock was depressed in part by a decline in the price of oil. Since then, the company has recovered and operates a highly efficient and profitable oil refinery in Avon, Calif.

“I think primarily the problem is perception,” said Thomas C. Lewis, who follows the energy industry for the firm Duff & Phelps. “It’s a company that has undergone significant change in terms of the type of business they are involved in as well as management.”

“The amount of improvement that has taken place at the company has been dramatic,” said Lewis. But referring to the stock price decline, he added: “A lot of people still remember what Tosco did to them long ago.”

While such companies have turned the corner, some still have a long way to go. One is Guy F. Atkinson, a construction company based in South San Francisco.

Atkinson had staked out a profitable share of the construction business by working on medium-sized public works projects, like roads, dams and bridges. But in recent years, much larger rivals, like Bechtel Corp., have entered Atkinson’s domain after seeing big public works and petrochemical projects dry up.

“The whole engineering and construction industry has had a rough time,” said David Bartlett an analyst with Sterling & York, a New York research and investment banking group. “The business got so bad that the heavyweights came into the market and shook things up. They took all the profit out of the business.”

Although Atkinson has begun to show signs of improvement, investors remain skeptical. “I think the street is waiting for a positive earnings trend,” Bartlett said.

LOWEST-PRICED COMPANIES

Companies ranked by market value as a percentage of book value.

Market 4/3/89 value as market value Book value Rank Company % of book ($ millions) ($ millions) 1 Columbia Savings 22 148.8 676.1 2 Wickes Cos.* 29 334.7 1,159.1 3 CalFed Inc. 40 558.3 1,383.1 4 Coast Savings & Loan 42 204.8 485.5 5 Great Am. First Savings 45 290.2 652.0 6 Glenfed Inc. 51 579.4 1,127.6 7 San Francisco Federal 59 104.2 175.6 8 Citadel Holding Corp.* 65 122.1 186.8 9 Bay View Federal Savings 69 113.0 163.7 10 HomeFed Corp. 70 672.3 954.6 11 Triton Group Ltd. 74 153.2 207.4 12 Tosco Corp. 75 201.9 268.8 13 First Executive Corp. 77 1,259.6 1,626.6 14 Guy F. Atkinson Co. 79 145.9 184.2 15 ICN Pharmaceuticals Inc. 79 108.6 137.1 16 Firemans Fund Corp. 85 1,561.1 1,838.0 17 Downey Savings & Loan 86 179.9 210.0 18 Sumitomo 87 160.2 184.2 19 Cipher Data Products Inc. 88 130.6 148.7 20 H.F. Ahmanson & Co.** 89 1,675.4 1,886.2 21 Fremont General Corp. 90 139.2 154.7 22 Transamerica Corp. 91 2,585.5 2,829.4 23 Pacific Gas & Electric** 91 7,407.9 8,100.1 24 Union Bank 93 760.9 819.8 25 First Capital Holdings 93 302.9 326.3

*See exceptions, page 38.

**See company notes, page 29.

HIGHEST-PRICED COMPANIES

Companies ranked by market value as a percent of book value.

4/3/89 Market as market value Book value Rank Company % of book ($ millions) ($ millions) 1 Carter Hawley Hale** (84) 192.5 (230.2) 2 Tejon Ranch Co. 1,787 516.8 28.9 3 Viratek Inc. 1,774 124.6 7.0 4 Adobe Systems Inc. 1,032 457.3 44.3 5 Neutrogena Corp. 935 551.1 58.9 6 Octel Communications 905 308.4 34.1 7 ADAC Laboratories 797 165.1 20.7 8 Medstone International 789 132.7 16.8 9 Oracle Systems Corp.* 776 1,496.0 192.8 10 Digital Microwave Corp. 747 354.6 47.5 11 WD-40 Co. 683 249.2 36.5 12 Molecular Biosystems Inc. 679 176.4 26.0 13 Cadence Design Systems 677 347.0 51.3 14 California Energy Co. 667 177.5 26.6 15 FHP International Corp. 646 230.3 35.7 16 L.A. Gear Inc. 642 265.1 41.3 17 Acuson Corp. 629 641.3 101.9 18 Syntex Corp. 627 4,723.9 753.5 19 United Television Inc. 610 368.7 60.5 20 Centex Telemanagement 608 159.4 26.2 21 XOMA Corp. 584 181.3 31.0 22 Franklin Resources Inc. 542 816.2 150.5 23 Alza Corp. 523 835.6 159.8 24 Gap Inc. 507 1,402.1 276.4 25 Autodesk Inc. 499 737.0 147.7

*See exceptions, page 38.

**See company notes, page 29.