84% of Area’s Stocks Increase in 1st Quarter : Market: Many companies are showing price gains as part of a boom on Wall Street. Shares of only seven firms fell.
The rising tide on Wall Street helped buoy the stocks of more than four-fifths of the public companies in the San Fernando Valley and Ventura County areas during the first quarter of 1991.
Of the 61 stocks of public companies in the area included in a survey compiled for the Los Angeles Times by Media General Financial Services, 51--or 84%--of them rose during the period. (The survey excluded area stocks whose Dec. 31, 1990, closing price was less than $1.50.)
As the broader market surged, many of the area stocks that did climb rose dramatically. For instance, five local stocks more than doubled in price during the first quarter. Meanwhile, only seven stocks fell during the quarter, and three were unchanged.
Overall, an index of regional stocks compiled by Media General climbed 15.8% in the first quarter of 1991, while the closely watched Dow Jones Industrial Average climbed 10.6% in the same period. (Stock markets were closed on Good Friday, so the first quarter ended at the close of trading on Thursday.) During the same quarter, the NASDAQ composite index--a broad national indicator of many stocks of small and new companies--rose an impressive 29%.
Many of the biggest gainers in the region followed the pattern of smaller over-the-counter stocks nationwide, which fell sharply in 1990 and rebounded in the first quarter of 1991. Indeed, of the 10 stocks in the local survey that climbed the most during the latest quarter, six showed double digit declines in price in 1990.
The best-known among the region’s stock winners in the first quarter, however, was an exception to that trend. Amgen, the Thousand Oaks biotechnology company, saw its stock climb 111% in the first quarter, to $131.25, after shooting up 154% during 1990.
The stock rose because of two promising developments. Early in March, Amgen scored a major legal victory when its patent on a biotechnology drug, with a potential $400-million-a-year market, was upheld in federal court. The drug, EPO, is for treating anemia in kidney disease patients. Earlier, the federal Food and Drug Administration cleared the way for Amgen to sell its second drug, which fights bacterial infections in cancer chemotherapy patients.
Some local stocks soared for less obvious reasons. The stock of Perceptronics Inc., a Woodland Hills maker of tank simulators and other military training equipment, shot up 121% to $4 per share from $1.81 per share on Dec. 31, despite the company’s report in late January that its profit for the Dec. 31 quarter fell 50% compared to the year-earlier period. A relatively cheap stock, Perceptronics’ shares had already climbed 52% during 1990.
Cecilia A. Wilkinson, a spokeswoman for the company, said Perceptronics has “regained a measure of investor confidence after a period of disappointing performance.” Since losing $7.4 million in the year that ended March 31, 1989, the company has been consistently profitable.
The stock of Com Systems, a Westlake long-distance telephone company, rose 115% to $3.50 during the first period after falling 48% during 1990.
A large part of the surge has come since Resurgens Communications Group Inc. of Atlanta said it agreed to purchase a controlling stake in Com Systems. Resurgens’ chairman said the two companies would probably merge eventually. But Com Systems’ 1990 performance was disappointing as it lost $1.5 million in the nine months that ended Sept. 30.
Last year was a tough one for investors in Huntway Partners L.P., a Valencia-based producer of liquid asphalt and other products refined from crude oil, who saw its stock price fall 78% to $2.50 per share as of Dec. 31. In November, Huntway had recorded a $3.58-million loss in the quarter that ended Sept. 30, thanks to a tripling in crude oil prices. Later the company said it was in technical default of some loan agreements, with the “acquiescence” of its bank.
But as the Gulf War got under way, oil prices fell back, and during the first quarter, Huntway’s share price jumped 105% to $5.13.
Shares of Nu-Med, a financially troubled Encino operator of hospitals and other health care facilities, about doubled in price from $2.06 to $4.13 during the first three months of 1991. They had plummeted 64% in 1990. Nu-Med actually announced in early March that it lost $3.5 million in its fiscal third quarter that ended Jan. 31--the same amount that it had lost a year earlier--while its revenues dropped 14% to $61 million for the period.
But Nu-Med announced in January that it agreed to sell two of its hospitals in an attempt to lower its crippling debts and raise cash. (After the end of the first quarter Nu-Med closed the deal.) Separately, the company announced in January that three representatives of a group of company shareholders who wanted a greater role in the company were elected to Nu-Med’s board. When the group announced last September that it was seeking the seats, the news had sparked a small rally in Nu-Med stock.
There was no common theme to the first quarter’s losing stocks in the region.
Brajdas Corp., a Woodland Hills electronic components distributor, reported a loss in the period that ended Nov. 30 and saw its stock fall 58% during the first quarter to $1.25 per share. Brajdas has had troubles since 1989; the company lost $440,613 in its November quarter, compared to a loss of $473,744 a year before. Brajdas blamed the recent loss on a weak economy and its withdrawal from the semiconductor distribution business.
After showing considerable enthusiasm for its stock, investors seemed to grow skeptical about Ventura Entertainment, as the fledgling North Hollywood company reported in February that it had suffered another profitless quarter. The stock fell 48% during the first quarter, from $7.75 per share to $4. Ventura Entertainment said it lost $2.8 million on sales of $1.85 million in the period that ended Dec. 31; the company has lost $6.31 million since its operations essentially began in the fall of 1989.
Shares of Martin Lawrence Limited Editions Inc., a Van Nuys operator of art galleries, fell 13% in the first three months of 1991, to $2.50 per share from $2.88 per share. The shares had already plummeted 67% during 1990.
In February, the company said its net income for 1990 fell 51% while its revenue inched ahead only 1%. Martin Lawrence cited the recession and a poor art market for the decline in profits, but the company has also been hurt by a lawsuit filed by Hard Rock Cafe Licensing Corp., which attempted to stop the gallery chain from distributing a serigraph by popular artist Hiromichi Yamagata.
Two of the smaller losers in the stock survey were historically strong bank holding companies--CU Bancorp, the Encino parent of California United Bank, and TransWorld Bancorp, the Sherman Oaks parent of TransWorld Bank.
CU’s shares fell 3% during the first quarter to $8.75 per share. Similarly, TransWorld stock fell 3% in the period to close at $12.50 per share.
Neither bank has reported serious troubles during the recession and real estate slump that have hurt many financial institutions. But investors were apparently wary of the banks’ stocks.
In the fourth quarter of 1990, CU added $1.45 million to its loan-loss reserves, which pulled down profits to $1.28 million for the period, 28% less than $1.77 million a year earlier. Meanwhile, TransWorld’s fourth-quarter net income rose 3% to $570,000 from $551,000 a year before.
BIGGEST VALLEY AREA STOCK WINNERS FOR 1ST QUARTER
Closing Price on Percent Stock 3/28/91 Change Line of Business Perceptronics $4.00 +121 Automation Com Systems $3.50 +115 L-D Carrier Amgen $131.25 +111 Biotechnology Huntway Partners LP $5.13 +105 Oil refining Nu-Med $4.13 +101 Hospital Datron Systems $10.25 +95 Communications Rexhall $6.13 +89 Motor homes Tandon $3.38 +87 Computer Mortgage & Realty Trust $4.13 +74 Real estate Syncor Int’l $17.00 +70 Pharmacy
Note: Excludes stocks whose Dec. 31, 1990, price was below $1.50 a share
Source: Media General Financial Services, Inc., Richmond, Va.
BIGGEST VALLEY AREA STOCK LOSERS FOR 1ST QUARTER
Closing Price on Percent Stock 3/28/91 Change Line of Business Brajdas $1.25 -58 Electronics Ventura Ent. $4.00 -48 Entertainment Martin Lawrence Ltd. Ed. $2.50 -13 Art Flamemaster $4.31 -13 Coatings Tejon Ranch $24.63 -4 Real estate CU Bancorp $8.75 -3 Banking TransWorld Bancorp $12.50 -3 Banking
Note: Excludes stocks whose Dec. 31, 1990, price was below $1.50 a share
