Regional Stock Prices Fall 4.3% in 2nd Quarter : Investing: Performance continues downtrend and mirrors larger markets. However, three S&Ls; and two oil-related firms showed strength.
The regional stock market in the second quarter duplicated its first-quarter performance almost to the letter, as three in five area stocks declined in value and prices overall fell 4.3% during the three months ended June 30.
Three savings and loans, as well as two petroleum-related companies, were among the strongest local performers, while a giant-screen theater maker and an apparel producer were among the hardest hit. The area’s stocks include 102 mostly smaller companies in the San Fernando and Santa Clarita valleys and Ventura County.
The trend among local stocks paralleled the general movement of larger markets, as the NASDAQ Composite, an index of about 4,000 companies comparable in size to many local firms, slipped 5%. The American Stock Exchange index was down 4%, and the Dow Jones Industrial Average of 30 blue-chip stocks dropped less than 1%.
H&H; Oil Tool Inc., a Santa Paula-based supplier of oil drilling equipment, was the biggest gainer in the quarter among local companies, as its stock price surged in response to the company’s agreement to merge with another equipment supplier. H&H; stock more than doubled from $4.50 at the beginning of the quarter to $9.63 on June 30.
The stock had languished for years in the $5 range as the company’s profits were hurt by a slump in oil production and strict California environmental regulations. But H&H; Chief Executive Henry Rushing said the stock soared when, in late May, the company agreed to merge with oil equipment supplier Weatherford International Inc., based in Houston. According to the agreement, Rushing said, each share of H&H; will be converted to .789 share of Weatherford, giving the deal a total value of $34.9 million based on Weatherford’s closing price of $13 on Friday. Weatherford expects revenue of $400 million in 1994, Rushing said, while H&H; expects $27 million.
Oxnard-based Benton Oil & Gas also posted strong gains, as its price climbed from $5.63 to $7.25, a 29% increase. The energy company has curtailed its domestic oil activities, partly because of low oil prices, and has announced plans to drill four to six deep natural gas wells in the Gulf Coast region of Louisiana.
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An S&L; and a bank holding company represented two of the top five local performers. The price of Glendale Federal Bank’s stock rose 91%, from $5.50 to $10.50. Glendale was reportedly close to being seized by federal regulators about a year ago because it was significantly undercapitalized. But in the latest quarter the stock price rebounded as investors reacted to the thrift’s sale last month, at book value or better, of $226 million in bad real estate and commercial loans.
“The sale didn’t require us to take a hit to earnings that a lot of other institutions have had to do,” said Jeff Misakian, director of investor relations for Glendale Federal. During the latest quarter, Glendale also announced the sale of 60 of its S&L; branches in Florida.
The stock of Ventura County National Bancorp, an Oxnard-based multibank holding company, experienced a similar surge, as the price of a share rose 57%, from $2 to $3.13. Other S&Ls; among the top performers were Great Western Financial Corp. of Chatsworth, whose stock rose 14% to $18.38, and Citadel Holding Corp. of Glendale, whose stock edged up from $5.50 to $6. The solid performance of the S&Ls; contrasted starkly with the results of the previous quarter, when thrifts fared poorly.
Of the 102 local stocks, 64 posted declines, two more than during the previous quarter, while 36 showed gains. Two were unchanged.
The biggest loser among local companies was Iwerks Entertainment Inc., a Burbank-based supplier of special-format movie theaters and virtual-reality attractions. The company’s stock fell from $21.25 a share to $6.63 during the recent quarter, a 69% decline partly attributed to the company’s announcement late last month that it would post a loss for its fiscal fourth quarter ended June 30.
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The expected loss was attributed to development costs of Iwerks’ Cinetropolis complexes, which combine large screens and motion-simulation under one roof with virtual-reality rides, restaurants and shops. The company also suffered higher than expected installation costs for its new giant-screen theater at Zion National Park in Utah.
“The company had been much more optimistic about how quickly some of these things were going to come on,” said Gene Heller of the Westwood-based firm Silverman Heller Associates, which manages Iwerks’ investor relations. “The feeling (among investors) was the company would be profitable sooner than it has been,” Heller said.
Cherokee Inc., the troubled Sunland-based maker of clothing and shoes, was also among the worst performers. Cherokee’s stock price fell 62% from $3 to $1.13, about a year after the company emerged from bankruptcy reorganization.
Joe Elles, a 12-year veteran of Lee Apparel, was named president of Cherokee in September, and he immediately embarked on an effort to streamline the company’s apparel line. This summer, the debt-heavy company jettisoned the dressy outfits and combination wear that were once part of its clothing array.
Instead, the company has focused on the products at the core of its market: jeans, casual pants and shirts for women.
Elles hired a number of executives from Lee to manage Cherokee’s sales operations, and also recruited designers from other fashion makers including Liz Claiborne.
But Elles’ moves apparently haven’t translated so far into investor confidence in Cherokee’s ability to succeed in a fiercely competitive industry.
10 Biggest Regional Stock Winners for 2nd Quarter
Closing Percent price on change from Stock 6/30/94 3/31/94 Line of business H&H; Oil Tool $9.63 +114 Oil equipment Glendale Federal Bank $10.50 +91 S&L; Ventura C N Bcp $3.13 +57 Banking Dick Clark Prod $9.00 +50 Entertainment Tekelec $8.50 +42 Telecommunications Chad Therapeutics $9.00 +41 Medical Benton Oil & Gas $7.25 +29 Energy 3-D Systems Cp $2.25 +29 Imaging systems MRV Comm Inc $6.63 +28 Semiconductor diodes Pacific Crest $7.25 +21 S&L; holding co.
Note: Excludes stocks whose March 31, 1994, price was below $1.50 a share
Source: Media General Financial Services Inc., Richmond, Va.
10 Biggest Regional Stock Losers for 2nd Quarter
Closing Percent price on change from Stock 6/30/94 3/31/94 Line of business Iwerks Entertain $6.63 -69 Entertainment Cherokee Inc $1.13 -62 Apparel Kenfil Inc $0.81 -60 Software Syncor Intl $9.50 -53 Pharmaceuticals House Fabrics $3.38 -48 Fabrics RKS Fin Grp $0.38 -45 Financial services Beverly Hills Fan $0.38 -40 Fans Medgroup Inc $0.50 -38 Physical therapy Hemacare Cp $3.75 -38 Medical Voice Powered $2.44 -37 Electronics
Note: Excludes stocks whose March 31, 1994, price was below $1.50 a share
Source: Media General Financial Services Inc., Richmond, Va.
