3 Out of 5 Local Stocks Decline in 1st Quarter : Investing: Overall loss of 3.5% reflects the Northridge earthquake and the recent reversal in the broad market.
Three out of five stocks in the region lost ground in the first quarter, reflecting the effects of the Northridge earthquake and the wave of frenzied selling in the overall market last week. Many analysts expect the downward trend to continue in the second quarter.
The local area’s stocks, which represent 102 mostly smaller companies in the San Fernando, Santa Clarita and Conejo valleys and Ventura County, declined by 3.5% overall in the three months ended March 31. Like the broader market, stocks in interest-sensitive sectors such as savings-and-loans and financial-services companies fared poorly, whereas stocks of health-care and semiconductor concerns turned in a solid performance.
The 3.5% decline in the value of local stocks was in tandem with several broader measures of the stock market. The Dow Jones Industrial Average of 30 industrial blue-chip stocks dropped 3.2%. The Nasdaq composite index, which includes about 4,000 stocks of mostly smaller companies, skidded 4.3%, while the Standard & Poor’s composite index of 500 industrial stocks was down 4.4%.
In general, analysts viewed the stock market decline as a correction, set in by concerns about rising interest rates, festering political problems at the White House and a growing number of foreign crises.
Among local stocks, especially hard-hit were insurance stocks following the Jan. 17 earthquake, led by home and auto insurer 20th Century Industries, whose stock plummeted 29%, to $19.50 at the end of the quarter from $27.38 at the start of the year. 20th Century, based in Woodland Hills, estimated earthquake claims at $325 million.
Even insurers that reported no earthquake losses had a fallout from the latest disaster. “The earthquake precipitated the fall and it just hasn’t been the same since,” said Cary Cheldin, executive vice president of Unico American, another property-casualty insurer in Woodland Hills. Despite increased revenue and earnings in recent quarters, Unico’s stock closed the first quarter at $5.75, down 25%. “The drop doesn’t reflect our performance. I think it reflects emotions in the marketplace.”
Of the 102 local stocks, 61 posted declines in the first quarter while 34 advanced. Seven finished unchanged.
Locally, the big winners included health-care and technology companies. Issues of Health Systems International, the new holding company of Woodland Hills-based Health Net and QualMed of Colorado, which recently merged, surged 56% in the quarter, to $26.25 from $16.88 a share. The merger earlier this year brought together two health-maintenance organizations with vastly different operating cultures, but it also created a huge HMO, with about 1.4 million members, which analysts say should benefit as the country heads toward national health-care reform.
Other health-care stocks that did well included Summit Health, the Burbank-based operator of nursing-care and retirement centers, whose stock edged up 7% to close the quarter at $9.13 a share. Wellpoint Health Networks, the Woodland Hills-based managed-care provider owned by Blue Cross of California, initially shot up to more than $35 a share earlier in the quarter but then dropped when nervousness set in last week, closing the quarter at $31.38, about the same as it was at the start of the year.
Two of the top five local performers were semiconductor companies--Diodes Inc. and Vitesse Semiconductor. Both stocks increased 39% in the last quarter. Diodes, a Chatsworth supplier of semiconductor rectifiers, finished at $7.50 a share, up from $5.38, and Camarillo-based Vitesse jumped to $5.38 from $3.88. Both companies reported better financial results in the fourth quarter.
Two more strong showings locally were turned in by With Design in Mind, a Chatsworth toy company, and Huntway Partners, a Valencia-based firm that supplies liquid asphalt to the construction industry. Shares in both companies--which have been recovering nicely from severe financial problems last year--doubled in value in the first quarter: Huntway to $2.75 a share and With Design to $2.
The biggest loser last quarter was Citadel Holding Corp., the Glendale-based parent of troubled Fidelity Federal Bank. Its stock lost more than half of its value, dropping to $5.50 at the end of the quarter from $11.75 on Dec. 31. Citadel, which has been struggling with the state’s miserable real estate market, recently reported that it lost $67 million in 1993, in contrast with a $2-million profit in 1992. Making matters worse, earlier this month Citadel said Chase Manhattan Bank, one of its creditors, had filed suit against Citadel to block it from restructuring its savings-and-loan.
Investors’ jitters about rising interest rates was also felt by Great Western Financial Corp. The Chatsworth-based parent of the nation’s second-largest S&L; saw its stock price slide 19%, to $16.13 a share from $20. Similarly, issues of Glendale Federal declined 23%, to $5.50 from $7.13.
Among notable local companies that rode Wall Street’s roller-coaster ride last quarter were Thousand Oaks-based biotechnology giant Amgen Inc., which dropped 23% to $38.25 from $49.50 at the start of the year; Superior Industries, the Van Nuys-based wheel maker, down 18% to $35 from $42.75, and Players International, the Calabasas-based operator of riverboat casinos, down 16% to $20.75 from $24.75.
10 Biggest Regional Stock Winners for 1st Quarter
Closing Percent price on change from Stock 3/31/94 12/31/93 Line of business Health Systems Intl $26.25 +56 Health-care Diodes $7.50 +39 Semiconductors Vitesse $5.38 +39 Computers Leslie’s Poolmart $11.50 +31 Pools Intl Remote Imaging $4.69 +25 Medical supplies Special Devices $9.50 +23 Automotive Xircom $20.50 +21 Computer equip. On Assignment $12.50 +19 Temporary help TransWorld Bancorp $14.04 +18 Banking Dole Food $31.50 +18 Foods
Note: Excludes stocks whose Dec. 31, 1993, price was below $1.50 a share
Source: Media General Financial Services Inc., Richmond, Va.
10 Biggest Regional Stock Losers for 1st Quarter
Closing Percent price on change from Stock 3/31/94 12/31/93 Line of business Citadel Holding $5.50 -53 S&L; holding co. Calif Amplifier $4.88 -42 Electronics Golden Systems $5.25 -39 Computer equip. New Image Industries $8.88 -37 Computer imaging Kenfil $2.00 -36 Software Cherokee $3.00 -35 Apparel Teledyne $17.25 -34 Aerospace Interlink Electron $8.50 -33 Electronics Twentieth Century Ind $19.50 -29 Insurance Matthews Studio $2.88 -28 Movie equip.
Note: Excludes stocks whose Dec. 31, 1993, price was below $1.50 a share
Source: Media General Financial Services Inc., Richmond, Va.
