Alex. Brown index beats broad marketOnce again, Alex...

BANKING & FINANCE

January 21, 1993|By David Conn

Alex. Brown index beats broad market

Once again, Alex. Brown Inc.'s Selected Investment Opportunities list has blown away the broader indexes.

An index based on the Baltimore company's recommended stock list increased 24.6 percent last year, compared with the 4.5 percent growth of the S&P 500, and the Dow Jones industrial average's 4.2 percent rise.

"Our investment criteria remained strong throughout the year," said Robert Killebrew, who chairs the company's investment committee. "We recommended stocks with strong growth potential, concentrating on those of middle-market capitalization," namely an average market cap of $5.9 billion.

Fifty companies appeared on the list at one time or another last year. A few that stuck it out the whole year: EXEL Limited; Foundation Health Corp.; Health Care Property Investors; Microsoft Corp.; Synergen Inc.; and Wal-Mart Stores Inc.

The index is based on an equal dollar investment in each stock, rather than the market cap and price weighting of the S&P and Dow. It represents a group of 20 to 30 companies from Alex. Brown's larger list of buy-rated stocks. They are replaced as the company's analysts see fit.

Since 1980, when Alex. Brown started tracking its performance, the index has had an annual compounded growth rate of 25.7 percent (not including dividends or transaction costs). By comparison, the S&P 500 has returned 11.3 percent a year since 1980.

So what's in store for 1993? Companies on the list this month include Infinity Broadcasting Corp.; HEALTHSOUTH Rehabilitation Corp.; Shoney's Inc.; Weingarten Real Estate Investment Trust; and Countrywide Credit Industries Inc.

Insurance companies, like any other businesses, want to decide when and how big a dividend to issue to stockholders. But some insurers in Maryland want even more: accreditation from the National Association of Insurance Commissioners.

The question is, which does the industry want more?

The issue will be decided during the legislative session, because Gov. William Donald Schaefer will sponsor a package of bills intended to win accreditation for the Maryland insurance division. NAIC accreditation means regulators in other states trust Maryland to examine Maryland-based insurers, and will allow those companies to operate in their states.

Most of the bills in the package are minor -- certification for reinsurance intermediaries is one example. But one bill would allow the insurance commissioner to reject the payment of "extraordinary dividends."

The governor's definition of extraordinary, which is still to be determined, probably will be a dividend greater than, say, 10 percent of either surplus or retained earnings -- or a combination of both, according to industry and administration members.

For the few Maryland insurers that only do business here, NAIC accreditation is probably not worth that kind of hassle, and some industry members predict there will be a fight over the issue. But others, including GEICO Corp., Monumental Corp. and USF&G Corp., are more than willing to give up some control over their finances.

"This issue -- making sure Maryland gets accreditation -- is very high on the priority list for us," said USF&G Vice President Jack Andryszak.

Venture fund wants Md. cash to stay home

Ninety percent of Maryland's venture capital dollars flow out of state. And that fact (established by a 1991 University of Baltimore study) seems to inspire John C. Weiss III. Here's what he's doing about it:

Mr. Weiss directs the Maryland Venture Capital Trust, a state-created fund that has attracted $19 million from state and county pension funds. The trust allocates money to venture companies that invest in Maryland, including $3 million each to Catalyst Ventures and Oxford Bioscience Partners last year.

Now, Mr. Weiss is on the verge of closing two more deals. One, he acknowledged, is with TDH, a venture firm based near Philadelphia. If the deal -- for $1 million or $2 million -- goes through, TDH has agreed to set up an office in Bethesda and start investing around Maryland, said general partner J.B. Doherty, who noted the firm's latest "TDH II" fund had almost $29 million in it.

"We're looking forward to being down there," Mr. Doherty said from Radnor, Pa., yesterday, noting the deal has not closed yet.

Mr. Weiss wouldn't disclose details of the other pending deal.

Meanwhile, Mr. Weiss said his venture trust is only about six weeks away from handing out the rest of its money. After that, it's just a matter of monitoring the selected venture funds. So Mr. Weiss, an industry veteran, said he's thinking about establishing another fund.

It would be based in Baltimore, and focused on companies in the area, he said. "I'd like to invest in my own backyard."

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