Chalk up one more for Valley stocks.
Shares of companies in the San Fernando Valley region again outperformed the overall stock market in the first quarter, just as they did in 1991. While Wall Street posted a decidedly mixed showing in the three months that ended March 31, 62% of the local issues moved ahead.
An index of the region's stocks, compiled for The Times by Media General Financial Services of Richmond, Va., also climbed higher (9%) than either the widely followed Standard & Poor's 500 index (which fell 3%) or the NASDAQ composite index covering the over-the-counter market (up 3%).
The flat performance of the broader market followed a robust year for stocks in 1991, in which the Dow Jones Industrial Average of 30 stocks jumped 20%, the NASDAQ composite index soared 57% and the Valley index climbed 26%.
In the latest three months, the broader market stalled as investors shifted their portfolios and waited to see whether the economy's long-sought rebound from recession is finally taking hold.
But of the local region's 89 publicly held companies--those headquartered in, or with a major presence in, the area from Glendale to Ventura--55 enjoyed first-quarter gains while 30 declined. Four stocks--Datametrics Corp., Fortune Petroleum Corp., Martin Lawrence Limited Editions Inc. and Tandon Corp.--finished unchanged.
Even the list of losers showed largely moderate declines. Of the 30 stocks that moved lower, 20 suffered declines of 15% or less.
During the quarter, investors took profits by unloading many of last year's highfliers and began placing their bets on other stocks, such as the so-called "cyclicals" that are expected to benefit from an improving economy in 1992.
Example: Superior Industries International Inc. is a Van Nuys-based manufacturer of automobile wheels whose stock ended the quarter at $46.13 a share, up 41%.
But that "rotation" of stocks, as Wall Street calls it, contributed to the first-quarter declines of such local stocks as Amgen Inc. and House of Fabrics Inc., which had soared 265% and 78%, respectively, during 1991.
In the latest quarter, Amgen, a biotechnology giant based in Thousand Oaks, fell 18% to close the quarter at $62.50 a share; fabric retailer House of Fabrics, based in Sherman Oaks, skidded 26% to $20 a share.
With the help of Amgen's slide, biotechnology and medical stocks were among the worst-performing industry groups--with a 21% drop in the quarter--as measured in Dow Jones & Co.'s Equity Market Index. (The entire index, incidentally, slipped 2.8% in the quarter.)
The region's biggest gainer was HemaCare Corp., a Sherman Oaks-based provider of blood-related services whose stock surged 95%, closing at $10.50 a share.
HemaCare benefited from growing investor interest in its proposed anti-AIDS plasma therapy, Immupath, which involves treating AIDS victims by giving them antibodies from the plasma of people who have thus far battled the disease successfully.
The therapy is undergoing human trials to see if it helps combat acquired immune deficiency syndrome. And last week, HemaCare said the U. S. Food and Drug Administration ruled that Immupath, if ever approved for sale, qualifies for "orphan drug" status under the Orphan Drug Act of 1983.
The law was enacted to encourage drug makers to develop products or therapies for rare diseases and related ailments. In exchange, the drugs or therapies are granted a seven-year monopoly in their market.
Other gainers in the first quarter benefited from old-fashioned fundamental improvement. Moreover, the companies' profit gains translated quickly into sharp gains in their stocks because many of the region's shares are low-priced, low-volume issues in which only a few trades can result in wide price swings.
For instance, California Amplifier Inc., a Camarillo supplier of components for home satellite dishes, posted a $627,000 profit for its fourth quarter that ended Feb. 29, against a $138,000 loss the previous year. Result: Its stock in the first quarter jumped 78%, to $8 a share.
Same story at Flamemaster Inc., a Sun Valley maker of coatings and sealants. Its stock climbed 50%, to $6 a share, after the company said its earnings in its fiscal first quarter that ended Dec. 31 shot up nearly threefold, to $157,123.
Another top gainer, Vitesse Semiconductor Corp. in Camarillo, got help not only from its improving performance, but also from the hot new-issues market during the quarter. After Vitesse's stock was first sold to the public at $9 a share Dec. 11, the stock ended this year's first quarter at $16.
The semiconductor maker also announced in February that a big order backlog is expected to lift its profit twentyfold or more in its fiscal second quarter that ended March 30. In the year-earlier quarter, Vitesse earned a mere $40,000.
Earnings problems, meanwhile, played a key role among the region's biggest losers in the first quarter.