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Published: Sunday, 1/9/2005

Area firms' shares outpace indexes

BY HOMER BRICKEY
BLADE SENIOR BUSINESS WRITER
Stock in OC, maker of insulation being restocked at The Andersons in Northwood, posted a year-end surge. Stock in OC, maker of insulation being restocked at The Andersons in Northwood, posted a year-end surge.
LISA DUTTON / BLADE Enlarge

The market basket of 21 Toledo-area stocks continued a streak last year, outperforming national stock indexes for the fourth straight year.

But that statistic carries a big asterisk: the unusual and risky speculation that caused the share price of bankrupt Owens Corning to multiply more than tenfold.

If that logic-defying situation is included, the northwest Ohio and southeast Michigan publicly traded corporations produced an astounding 56 percent average total return for shareholders in 2004. Total return includes the increase in the stock price as well as dividends paid.

Excluding OC, whose stock is likely to be worthless when the company emerges from bankruptcy protection, the area stock performance almost mirrors national indexes, with 7.8 percent average total return.

That's right in the middle of the 5.3 percent total return for the Dow Jones industrial average and the 10.9 percent total return for the Standard & Poor's 500-stock index. The Nasdaq composite rose 9 percent, not counting dividends, which are rare in the tech-laden index.

The eight area firms traded on the New York Stock Exchange turned in a respectable return of 9.3 percent, and the 12 Nasdaq issues had returns averaging 11.3 percent.

Ohio Art Co., a Bryan toy maker, is the only area firm traded on the Pink Sheets quotation system and was down 43 percent.

Toledo's OC, now in its fifth year of Chapter 11 bankruptcy proceedings to deal with billions of dollars in asbestos-injury liability, apparently benefited from investor optimism that the new Congress will enact tort reform or some other bailout for the lawsuit-plagued former makers of asbestos.

But Dave Dimmer, a spokesman for the fiberglass maker, cautioned that the company has said all along that its common stock is likely to be worthless. "Our plan of reorganization still anticipates the shares will have to be canceled," he said last week.

Almost all of OC's amazing rise occurred after the November national election. Almost 125 million trades of its shares occurred. The firm has just 55 million shares outstanding.

Also benefiting from the asbestos optimism were shareholders of another Toledo firm, Owens-Illinois Inc. Its price almost doubled during a year that also was marked by a major European acquisition for the world's largest glass-container maker, sale of the plastic-bottle operation, paydown of debt, and the naming of a new chairman and chief executive officer.

Steven McCracken, the new CEO, recently told The Blade that O-I is focusing on what it does best, and investors are noticing. "We are a top-tier performer," he said. "The future is bright, and [Wall Street] agrees."

Shareholders of some area-based companies were rewarded for their patience. For example, shares of The Andersons Inc., based in Maumee, sold at the highest levels in the diversified firm's eight years on Nasdaq.

The agribusiness boosted its profit projections late in the year after good performance from its grain and rail-car leasing and repair segments.

"We essentially doubled our rail business," said Michael Anderson, president and CEO. About a year ago, the firm acquired the assets of a competitor, including 6,900 rail cars and 48 locomotives.

Area banks generally did better than most companies, with total returns averaging more than 13 percent.

The best performance was turned in by MBT Financial Corp. of Monroe, with a 47 percent total return, aided by its dividends totaling 62 cents a share.

Joseph Stieven, an analyst with Stifel, Nicolaus & Co. in St. Louis, said Midwest banks in general were good performers last year. MBT has made "good strides" in the last year to year and a half, and has a new CEO, he said.

Exchange Bancshares Inc., based in Luckey, Ohio, dropped 17 percent in value, largely because of losses of nearly $500,000 in the first three quarters from loan writeoffs, and cessation of dividends.

New CEO Vic Proffitt said the small bank is "trying to clean up the balance sheet. We've got new management and are headed in the right direction."

At the bottom of last year's list are two of the area's smallest public companies: Ohio Art and N-Viro International Corp., a Toledo wastewater-treatment firm.

Ohio Art suffered from losses and disappointing sales, and it voluntarily delisted from the American Stock Exchange after trading there for 35 years.

Company officials say they are spending more money to develop new toys.

The best performer for 2003 was N-Viro, but last year it was trying to recover from a pattern of losses. Chairman Phil Levin said he's optimistic for 2005.

Altogether, 15 of the 21 area firms had positive returns, and 17 paid dividends - topped by $2.39 a share for Toledo's Health Care REIT Inc. and $1.80 a share for Sandusky's Cedar Fair LP.

Contact Homer Brickey at: homerbrickey@theblade.com or 419-724-6129.



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