O.C. Carried Along on Market’s Bumpy Ride : Stocks: Most companies in Times index saw share value drop, with high-tech and drug firms among the biggest losers.
Like a jetliner hit by an unexpected downdraft, the long-soaring stock market lost elevation quickly on Monday, and dozens of Orange County companies were among the queasy passengers trying to ride out the turbulence.
Of the 113 companies in The Times’ index of Orange County stocks, nearly two-thirds watched the price of their shares fall. Overall, the index took its biggest hit since Oct. 9, falling 1.8% to 128.81.
Volatile high-tech companies were among the biggest losers in Orange County, but the list of wounded stocks also included financial corporations and pharmaceutical firms. Officials at many Orange County companies said their stocks were simply being battered by the same forces affecting stocks nationwide, and analysts agreed.
“There’s no reason fundamentally for [Orange County stocks] to be down,” said Stephen Weinress, managing partner in the Irvine-based investment firm of L.H. Friend, Weinress, Frankson & Presson. “The real thing that triggered the falloff today is the failure of the federal government to pass a budget.”
Weinress joined a chorus of analysts blaming the government for one of the stock market’s worst days in the past four years. Analysts said the sell-off reflected investors’ fears that the impasse over the federal budget will drag on, making foreign investors particularly nervous about their holdings in the United States, and reducing the likelihood that the government will boost the economy by lowering interest rates.
The Dow Jones industrial average, which includes the stocks of many of the nation’s largest companies, fell 101.52 points, or 1.96%, to close at 5,075.21. That was the biggest single-day drop since Nov. 15, 1991.
The Orange County company that had the biggest dollar loss was PairGain Technologies Inc., a Tustin-based manufacturer of telecommunications equipment. PairGain’s stock had been trading at $50 per share, but tumbled $3.25 to close at $46.75 per share in Nasdaq trading Tuesday
Howard Flagg, president of PairGain, said the company lost more than any other partly because the company had more than most to lose. When the stock was trading at $50, “we were at our yearly high,” Flagg said. “It’s really not anything anybody is concerned about.”
Given the heavy concentration of high-tech companies in Orange County, the region escaped the sell-off with relatively little damage. High-tech stocks tend to be more volatile than most partly because the business changes so rapidly that sorting out winners and losers can sometimes seem impossible.
Investors’ huge appetite for high-tech stocks has driven their prices sky-high this year, making them even more vulnerable to sudden downturns. That dynamic appeared to be partly behind the steep decline in PairGain’s stock price.
Measuring stock price declines in terms of percentages, Cortex Pharmaceuticals, an Irvine company that makes drugs to combat neurological disorders, fell farther than any other Orange County stock trading above $2 per share. The company’s stock price tumbled 17.4% to close at $2.375.
Scott Hagen, chief financial officer at Cortex, said the company’s stock price had been sinking recently because of the resignation of the chief executive at the end of October, and because some shareholders appeared to be taking year-end losses to reduce their income tax liabilities.
“But the big drop in the general market today accelerated that process,” Hagen said.
WFS Financial, an Irvine-based auto financing company, and Quality Systems Inc., a Tustin-based company that sells software to dental and medical groups, were also among the hardest hit.
Quality Systems’ stock fell 11.5% to close at $23.25, but like many so-called losers on Monday, chief executive Sheldon Razin wasn’t frowning.
“Our stock a year ago was at $2 per share,” he said. “So even at $23.25, we’re really happy campers.”
