COSTA MESA — Jeffrey Kilpatrick figured he had a great product when he launched the Orange County Growth Fund in 1988: Let investors profit from the area's booming growth by buying into a fund that included stocks of some of the county's hottest public companies.
But with just a few exceptions, those stocks tend to be highly volatile. And in 1990 they plunged further and faster than the market as a whole: The Orange County Growth Fund ended the year as one of the poorest-performing mutual funds in the nation.
Still, the Costa Mesa broker's basic premise was correct--the stocks in his fund echoed the performance of most other public companies in the county.
Unfortunately, 1990 was the year that most everything fell.
The superstar was AST Research Inc., a computer maker whose stock value soared, rising 259% over the year as a series of hot new products propelled the company's sales and earnings.
The stocks of a handful of medical services and medical products companies also increased during the year, lending credence to the belief that the health industry tends to weather an economic downturn better than most. Or, as some analysts say, people get just as sick when the economy is down as when it is up.
Varco International and Petrominerals, two of the county's three publicly held, energy-related firms, posted stock price gains in the wake of Iraq's invasion of Kuwait and the resulting hike in oil prices. The third firm, Fluor Corp.--which is having one of its best years on record--would have posted a slight gain for 1990, except for a 75-cent drop in its common stock price in Monday's trading.
Of 95 publicly traded Orange County companies followed by The Times for the past 12 months, only 17 finally ended the year with stock prices higher than on the final trading day of 1989. The average price of a share of a county-based company's stock fell 20.5% over the year--a bigger decline than posted by any of the national indexes.
So, an investor who had bought one share of each stock on The Times list at the end of 1989 and sold those shares as the 1990 market closed Monday would be $170.98 poorer.
Of course, few people buy stocks indiscriminately.
But it took a lot of firsthand knowledge about local companies to make money on Orange County stocks last year.
