February 5, 2001
MAINE STOCK TRENDS
The (stock) barometer rises in January
Copyright © 2001 Blethen Maine Newspapers Inc.
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January in Maine is a time when we often talk about the cold and the snow. And somewhere in the conversation about the cold and the snow, thermometers and barometers come up. And once thermometers and barometers enter into the conversation, invariably someone then brings up the stock market. The next thing you know, someone's talking about "the January barometer".
The "barometer" uses the Standard & Poor's 500 January performance to predict the overall direction of the stock market for the coming year. A good January indicates a bullish year, and a poor January means a bearish year. Going back to 1934, the January barometer has demonstrated about an 80 percent accuracy rate.
The theory behind this relates to investor optimism —If investors and analysts are optimistic at the beginning of the year, this bullishness will continue on through the year.
What did the barometer tell us about the year 2000? Well, during the month of January 2000, the S&P 500 fell 5.09 percent, (correctly) predicting a bum year.
What is the January barometer telling us for this year? The S&P 500 just completed a 3.48 percent increase this January. That's supposed to mean the market will finish 2001 higher than where it began, which was 1320.13 on the S&P. Stay tuned. We'll have the correct answer for you in 11 months.
On the Maine stock front, I-Many (IMNY-$20.94) investors wrote their own version of the January barometer for this Portland company. With the worst of winter hopefully behind us, I-Many thawed out its stock price, which resulted in a 48 percent spurt — in just one week. Interestingly, it wasn't one big day that accounted for the price movement. Actually, the stock moved up by a little bit, every day last week. The move came on strong volume, too, which is a bullish sign. I-Many traded 6.2 million shares last week, almost twice the entire number of shares that traded during the entire first three weeks of January combined!
The price increase did not go unnoticed by insiders at I-Many. After the lock-up from July's IPO expired in early January, two institutional investors filed with the S.E.C. to sell some of their shares. Impris SB, LP filed to sell 20,849 shares. Another investor, WI Software Investors, LLC, filed to sell 240,426 shares.
Earnings at I-Many are due out this Thursday, Feb. 8. To listen to the 5 p.m. (EST) conference call, you can click here: Q4 2000 I-Many, Inc. Earnings Conference Call
ImmuCell (ICCC-$2.69) releases its fourth quarter and year-end results on Wednesday, Feb. 7, the day before I-Many. While ImmuCell couldn't compete with I-Many's weekly gain, its stock was up 68.3 percent in January. That made ImmuCell January's top performing local stock and another beneficiary of the thaw.
The good month didn't end there. Among Maine's more frequently trading publicly traded companies, 13 of the 17 stocks were up for the first month of the year. An impressive 8 of those 13 turned in double digit performances. Of course investors here in Maine will probably need gains like that to pay for the roof damage this year.
| Camden National Corp. 2000 vs. 1999 | ||
| Fourth quarter net operating income was up 37 percent. For the full year, Camden earned $1.65 in net operating income, an increase of 10.7 percent. Other figures are below | ||
| Benchmark | 2000 | 1999 |
| Return on average assets | 1.40 percent | 1.15 percent |
| Return on average equity | 16.43 percent | 13.16 percent |
| Reserve for loan losses as a percentage of total loans | 1.54 percent | 1.48 percent |
| Non-performing assets | $6.9 million, or .98 percent of total loans outstanding | $7.6 million, or 1.20 percent of total loans outstanding |
| Efficiency ratio | 52.6 percent | 59.1 percent |
Among local companies in the "double digit returns" column was Camden National Corporation (CAC-$15.87). The midcoast bank holding company's stock was up 12.63 percent last month. An impressive fourth quarter earnings announcement on Jan. 30 helped things along a bit as the stock ran up to a little more than $16 on the final day of the month before settling back at week's end. There were a couple of 9,000-plus share trading days for Camden last week also. Those were notable since the company had fewer than a dozen days in which its stock traded 10,000 or more shares in all of last year.
Another bank holding company whose stock performed well in January was Northeast Bancshares (NBN-$10.50). Northeast was up 19.4 percent last month. In a 13g report filed with the S.E.C. last week, the investment management group Tontine Financial Partners, LLC, et al announced that it (and its affiliates) collectively acquired 236,500 shares of Northeast. The purchase represents 8.8 percent of all the outstanding common stock. The stock is thinly traded. It appears that the block of stock may have been purchased from director Ronald Goguen, who bought into the bank holding company back in the early 1990's. Goguen sold 100,000 shares in December, which left him with 243,813 shares.
Showing what a crazy year it's already turning out to be, January brought bad news came from one local company and its stock price moved higher. Year 2001 earnings estimates for Fairchild Semiconductor (FCS-$17) dropped pretty dramatically over the past 30 days. The year 2001 consensus estimate had been up around $2.93-$3.07 per share during most of last year. Then, in early January, the company warned that fourth quarter 2000 revenue would fall short of estimates, and that the softness would continue into the first quarter of 2001. Now, the current year's consensus earnings estimate at IBES is $1.85 per share, which is seen growing to $2.07 in 2002. Both of those are less than the $2.69 record earnings per share reported for last year. Notwithstanding January's bad news, the stock moved up 27.5 percent during the month.
Buried in the bad news of January was news that Fairchild would acquire Intersil Corporation's discreet power business for $331 million in cash. That will make Fairchild the number two player in the $3 billion Power MOSFIT market, market that the company says, grew 40 percent last year. To finance the acquisition, Fairchild plans to sell $350 million in subordinated to institutional investors.
Only one Maine stock was in double digits on the downside in January. That was Maine Public Service Co. (MAP-$23.60), which fell 10.6 percent for the month. There was no news to account for the lower stock price. Many electric utilities have fallen in recent weeks in sympathy with the power crisis in California. There is concern that deregulation may not work, since the process began in California. There is also concern that merger activity among the electric utilities may grind to halt. Maine Public's stock price benefited once in June 1999 when CMP Group and Energy East announced their merger. And, it ran up again last June 30, when its southern neighbor, Bangor Hydro Electric Company (BGR-$25.90) and Canada's Emera announced their merger. That left the Aroostook transmission and distribution company as the only major remaining electric utility in the State of Maine not yet at the altar. For its part, Maine Public Service says that deregulation in Maine is a different (and much better) story from what it is in California. Most (outside of California) agree.
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