January 1, 2001
MAINE STOCK TRENDS
Maine stocks do well (relatively speaking) in 2000
Copyright © 2000 Blethen Maine Newspapers Inc.
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For many investors, the best thing that can be said about the year 2000 is that it is over. The Dow Jones Industrial Average fell 6.2 percent. The Standard &Poor's 500 fell 10.1 percent. And, the NASDAQ Composite fell 39.0 percent for the year. While the averages may not reflect it, there's a real bear market going on out there.
Maine companies fared better than the popular averages in the year 2000. We'd even go so far as to say it was, comparatively, a decent year for those who kept some investments in their own backyard. The average Maine stock gained 5.9 percent last year. Even after throwing out the best and the worst performing local stocks, the average still showed a gain of 4.55 percent, handily beating all of the major indices. Even the median return among 22 Maine-based companies was a still positive .77 percent in 2000.
Maine stocks were pretty typical in other ways, though. The two top performing companies, Brunswick Technologies (BTIC +138.6 percent) and Mid-Coast Bancorp (MCBN +127.8 percent) became acquisitions in 2000. The gain in Brunswick Tech can actually be ascribed to two factors. Brunswick's stock had fallen to an all time low at year-end 1999. Once tax loss selling subsided, the stock rose more than 50 percent during the first few trading days of 2000. But even at $5.50, it was too tempting for CertainTeed, which already owned 14 percent of the company and was also its chief supplier of glass fiber. In June, CertainTeed muscled its way through a hostile takeover and ended up with Brunswick Tech for just $8.50 per share. Mid-Coast, on the other hand, orchestrated a friendly merger with Ellsworth's Union Bankshares. Mid-Coast stockholders all cashed out with a profit when its merger was completed. Such was the case for shareholders of Hannaford and CMP Group also. Their deals were announced in 1999 and concluded in 2000.
Among the companies that are still Maine-based, the top performer was Bangor Hydro-Electric Company (BGR-$25.69) up 56.27 percent for the year. But, even Bangor isn't much longer for the world of publicly traded companies. Maine's second largest electric utility plans to be acquired for $26.50 cash later this year by Nova Scotia's Emera Inc.
The worst performing Maine stock, not surprisingly, was a "dot com" play, Acadia Group (AHNS-$.02). Acadia enjoyed 15 minutes of fame in the first quarter of 2000, hoping to provide Internet continuing education for physicians. From peak to trough, Acadia lost 99.7 percent of its entire stock market capitalization last year. What little is left (one and one half cents per share) can be expected to follow. Directors met in September and voted to suspend the company's business. Acadia rose from essentially nothing to a high of $9.125 in January before plummeting to earth.
Behind Acadia were Intelligent Controls (ICCC-$1.00) down 55.56 percent and American Skiing (SKI-$1.44) down 54.90. Intelligent Controls saw sales slump by 27 percent over the first nine months of 2000. Other than that, the company simply seemed to be a victim of the slaughter among micro cap stocks. American Skiing's high debt load combined with another winter of poor skiing conditions led the company to report a loss of $52.5 million. This required another cash infusion from Uncle Bass, which in turn meant more dilution of the company's stock. Since becoming a publicly traded company in 1997, American Skiing Co. has never shown a positive year in either earnings or stock price. That pattern doesn't appear to be changing. For one thing, there is only $1.44 of share price left to give up, and secondly, shareholders will be asked to put an end to the company, as we know it. American Skiing is expected to merge with MeriStar Resorts (MMH-$2.63) this year. With that, the company will get a new name, a new headquarters, and a new CEO and president.
The industry here in Maine with the most publicly traded companies is banking. Aside from Mid-Coast Bancorp, the top performing banks were Banknorth Group (BKNG-19.94) up 19.03 percent and First Coastal Corporation (FCME-9.50), which was up 15.5 percent. But, not all of our banks fared so well. Bar Harbor Bankshares (BHB-14.13) and Camden National (CAC-$14.25), two well-run community banks, ended the year down 20.4 and 14.9 percent, respectively.
While the good news was that Maine stocks outperformed the national averages in 2000,the price that we paid was steep. Maine lost five of its publicly traded companies to mergers/acquisitions. The five lost were Brunswick Technologies (sold for $8.50 cash to Saint-Gobain/CertainTeed/VF Acquisition), CMP Group (CTP sold for $29.50 cash to Energy East), Hannaford Bros Co. (HRD sold for approximately $75.16 in cash and stock to Delhaize America), Penobscot Shoe (sold to a private group for $11.50 cash) and Mid-Coast Bancorp (sold for $15.88 cash to Union Bankshares). I-Many (IMNY-12.44) was the only local initial public offering of 2000. With a gain of 38.2 percent in a year like last, I-Many proved to be a respectable addition, particularly for an e-commerce company. Unfortunately, at least two more locally headquartered companies will disappear in 2001. Due to previously announced mergers, Bangor Hydro-Electric and American Skiing are each expected to say farewell in the first half of 2001. Another company, Acadia Group, has been limping along on borrowed time for months. Acadia's directors met in late September and voted to cease operations effective September 29. The stock has traded nearly 1.4 million shares since then and continued to trade as recently as last Friday, albeit for less than two pennies a share. Are we missing something here? Going from $.015 to zero is still a hundred percent loss, isn't' it?
What will be the top performing stocks in 2001? Many of last year's top stocks didn't perform very well in 1999. Both of 2000's top two stocks, Brunswick Technologies and Mid-Coast Bancorp, had negative stock market returns in 1999. On the other hand, the next two best performers, Bangor Hydro and Maine Public Service (MAP-$26.38), the latter of which was up 51.8 percent in 2000, each had good years in 1999. And, two of last year's worst performers, American Skiing and Intelligent Controls, each had bad years in 1999 also.
If there is something to be taken from past in trying to predict the future in the local securities markets, perhaps it is this: when the value is compelling enough, bargains emerge and higher stock prices almost always inevitably follow.
Now, it's your turn. You are invited to share with us your two favorite local stock picks for the year 2001. Which do you feel will be the top percentage performers for the year 2001? Since there are only about twenty or so local companies from which to choose, you need to select two. To be eligible, the companies must be headquartered here in Maine and their shares must be available for purchase. And, just to make things even more interesting, you can also pick a third company÷one that isn't Maine-based, but one which has meaningful operations here in Maine, such as one of the paper companies. And, if you are really adventurous, tell us what Maine company you expect will turn in the worst stock market performance for the year? Send your entries to info@MaineSec.com Please include your name and your city/state of origin.
Brad McCurtain is president of Maine Securities Corporation. Maine Securities Corporation is an investment firm specializing in Maine's securities. From time to time, the corporation, its employees, and its clients may buy, hold, and/or sell positions in companies mentioned herein. As a regulated securities broker/dealer, the company and its employees are required to abide by all securities regulations at all times when communicating with the public. Brad McCurtain may be reached at info@MaineSec.com. Web site: http://www.MaineSec.com