The stocks of lots of little and little-known Washington companies made the most spectacular gains last quarter, but a few of the biggest and best-known firms in the region made the most money for Washington investors.
In a quarter when the Washington Post-Bloomberg regional stock index advanced a little more than 6 percent, four stocks had triple-digit gains, eight others rose more than 50 percent and two-thirds of all local issues were up.
With small companies setting the pace, the 15.8 percent gain in the shares of Capital One Financial Corp. and the 11.4 percent advance by Marriott International Inc. don't even rank among the top 50 performers.
But Capital One made $1.8 billion for its shareholders when shares of the Falls Church credit card bank climbed from $49.18 a share to $57.04 in the quarter ending Sept. 30.
The total market value of Marriott's shares grew by $1.1 billion when the lodging chain's stock went from $38.42 to $43.03.
The $2.9 billion in gains made by Capital One and Marriott shareholders would be more than enough to buy every share of the 10 top-performing local stocks last quarter -- with about a billion dollars left over.
Headed by Xybernaut Corp., the "wearable computer" company with an ever-erratic stock that gained 182.8 percent, the third quarter's top 10 list is mostly a menagerie of micro-cap stocks -- little companies whose low-priced shares are highly volatile. (The accompanying chart does not include stocks that closed the quarter at less than 10 cents a share, many of which had the biggest changes, up and down.)
Even among the quarter's top 50 performers, there are only a handful of companies with total stock market values that exceeded $1 billion. That threshold qualifies a company to be considered a mid-cap -- short for middle-capitalization company -- and therefore less risky over the long run than smaller firms..
The one company with a billion-dollar valuation among the quarter's 10 biggest gainers was Igen International Inc., a Gaithersburg biotechnology company, the stock of which gained 79.5 percent to end the quarter at $57.58.
Igen's visit to the billion-dollar club is going to be temporary, because the company in July agreed to be acquired by Roche Holding Ltd., the giant Swiss drug company.
For years, Igen and Roche have been partners in a blood testing business in which Roche produced and distributed technology invented by Igen. Joined at the hip, but at each others' throats, Igen and Roche have been in a long-running legal battle that was finally decided in June.
Igen won, getting the right to cancel the partnership, which would have cost Roche hundreds of millions of dollars of revenue a year and perhaps its position as the world's dominant player in blood testing.
Within three weeks of the court ruling, Roche agreed to buy out Igen for $1.4 billion. Roche wants only the blood testing technology, so it is giving the rest of Igen's business back to the shareholders, along with $47.25 a share in cash.
Igen stock, which long traded in the teens, had climbed to $31.33 in anticipation of some kind of settlement with Roche. It jumped to a high of $60.17 after the merger announcement.
At that price, investors were putting a value of more than $10 a share on the parts of the business that Roche isn't buying -- which includes government bio-terrorism contracts that for security reasons are off limits to foreign firms such as Roche.
Igen stock has been holding in the upper 50s since the Roche deal was announced and is expected to stay there until the transaction is completed. Then Igen will be renamed BioVeris Corp. and will go back to being what it was before -- a well-managed, well-financed little biotech company with a market value in the $250 million range.
For Igen investors, this is having your cake and eating it, too. They're going to collect $47.25 a share from Roche and for every Igen share will get a share of BioVeris.
It'll be one of the best paydays ever for investors in local biotech companies, whose patience and confidence in the industry have not always been rewarded.
Patience and confidence also bought rewards for investors in Capital One Financial and Marriott International, both of which have methodically recovered from body blows -- self-inflicted at Capital One, delivered by the Sept. 11, 2001, terrorist attacks at Marriott.
During the summer of 2001, Capital One stock plunged from $65 a share to $24.70 when questions were raised about the credit card giant's accounting and potential bad-debt losses.
Analysts who advised long-term investors not to panic turned out to be right. Investors gutsy enough to get in when others were getting out caught a turnaround train that delivered an $8 billion increase in market value. As recently as last March, Washington investors could have bought Capital One stock for a little more than $25 a share. The stock doubled within three months, kept climbing last quarter and now is within $5 of its old high.
Marriott's shares lost almost half their value after the terrorist attacks on the World Trade Center and the Pentagon destroyed the company's downtown Manhattan hotel and devastated the entire lodging industry.
Like Capital One's stock, Marriott shares are still about $5 short of a full recovery. But they are up about 50 percent from their low earlier this year, restoring more than $3 billion to Marriott's market capitalization.
Vacation travelers have resurrected Marriott and other hotel chains. The business travel industry is still soft, weakened by corporate cost-cutting. Cross-country leisure travel is still down because of the reluctance to fly. But this summer, families went on the road, doing regional trips that helped fill Marriott's beds. Lodging analysts predict that as the economy improves, business travel will resume and the industry will continue to improve.
Back-from-the-brink recoveries also rewarded investors in NII Holdings Inc., the overseas operator of Nextel mobile phones, and XM Satellite Radio Inc., the nationwide pay-to-listen service that is rapidly approaching a million paying customers.
NII came out of Chapter 11 bankruptcy protection last November as a $6.50-a-share stock and closed at an all-time high of $65.44 a share Friday. Never mind the percentages, that's 10 times your money in a little more than 10 months, the most spectacular post-bankruptcy performance by any local company that anyone can remember.
Unlike most bankruptcies, in which the original owners are all wiped out, the big players who owned Nextel International have shared in the recovery. They not only owned stock in the company, they owned bonds. The stock did become worthless, but the bondholders wound up owning the company.
The 51.3 percent increase in NII stock last quarter boosted the company's market value to $1.5 billion. Even with that gain, the bondholders have yet to break even because their bonds were originally worth far more than that. The few investors who spotted the stock when it began trading, however, have had an incredible ride.
XM did not go bankrupt, but it came awfully close last fall when it looked as if the company might run out of money before it could turn its innovative technology into a business. Up 20.4 percent last quarter, XM shares are now worth nine times what they were last November when they plunged to $1.75 a share.
High tech and high fashion are the appeal of the two penny stocks that had the biggest percentage returns among local stocks last quarter.
Xybernaut, the Fairfax company known for computers compact enough to be called "wearable," could not be more different from I.C. Isaacs & Co., whose wearables are sold under the Marithe & Francois Girbaud brand.
The Baltimore sportswear maker seems to be struggling back from bad times. Its stock climbed from 48 cents to $1.12 during the quarter -- a 133.3 percent gain.
A quarter million shares a day is heavy trading for Isaacs stock, but the volume in Xybernaut shares hit a mind-boggling 83 million shares Sept. 18, when the stock briefly sold for $2.66 a share.
By the end of the quarter -- just eight trading sessions later -- it was down more than a dollar to $1.64, still good enough to produce a 182.8 percent return for the quarter.
Xybernaut is often the most heavily traded Washington stock, the frenzied trading driven by a daily stream of positive press releases and constant chat on the Internet.
The traders who unload Xybernaut shares when they hit peaks like the latest one are making far more money than the company, for which profits have been as hard to find as weapons of mass destruction in Iraq.
Neither the lack of profits, nor the stock's constant churning, nor the dizzying ups and downs of the price nor the repeated warnings in this column have deterred people from playing the Xybernaut game. Maybe this quarter they will learn, but I doubt it.
In a quarter when the Washington Post-Bloomberg regional stock index advanced a little more than 6 percent, four stocks had triple-digit gains, eight others rose more than 50 percent and two-thirds of all local issues were up.
With small companies setting the pace, the 15.8 percent gain in the shares of Capital One Financial Corp. and the 11.4 percent advance by Marriott International Inc. don't even rank among the top 50 performers.
But Capital One made $1.8 billion for its shareholders when shares of the Falls Church credit card bank climbed from $49.18 a share to $57.04 in the quarter ending Sept. 30.
The total market value of Marriott's shares grew by $1.1 billion when the lodging chain's stock went from $38.42 to $43.03.
The $2.9 billion in gains made by Capital One and Marriott shareholders would be more than enough to buy every share of the 10 top-performing local stocks last quarter -- with about a billion dollars left over.
Headed by Xybernaut Corp., the "wearable computer" company with an ever-erratic stock that gained 182.8 percent, the third quarter's top 10 list is mostly a menagerie of micro-cap stocks -- little companies whose low-priced shares are highly volatile. (The accompanying chart does not include stocks that closed the quarter at less than 10 cents a share, many of which had the biggest changes, up and down.)
Even among the quarter's top 50 performers, there are only a handful of companies with total stock market values that exceeded $1 billion. That threshold qualifies a company to be considered a mid-cap -- short for middle-capitalization company -- and therefore less risky over the long run than smaller firms..
The one company with a billion-dollar valuation among the quarter's 10 biggest gainers was Igen International Inc., a Gaithersburg biotechnology company, the stock of which gained 79.5 percent to end the quarter at $57.58.
Igen's visit to the billion-dollar club is going to be temporary, because the company in July agreed to be acquired by Roche Holding Ltd., the giant Swiss drug company.
For years, Igen and Roche have been partners in a blood testing business in which Roche produced and distributed technology invented by Igen. Joined at the hip, but at each others' throats, Igen and Roche have been in a long-running legal battle that was finally decided in June.
Igen won, getting the right to cancel the partnership, which would have cost Roche hundreds of millions of dollars of revenue a year and perhaps its position as the world's dominant player in blood testing.
Within three weeks of the court ruling, Roche agreed to buy out Igen for $1.4 billion. Roche wants only the blood testing technology, so it is giving the rest of Igen's business back to the shareholders, along with $47.25 a share in cash.
Igen stock, which long traded in the teens, had climbed to $31.33 in anticipation of some kind of settlement with Roche. It jumped to a high of $60.17 after the merger announcement.
At that price, investors were putting a value of more than $10 a share on the parts of the business that Roche isn't buying -- which includes government bio-terrorism contracts that for security reasons are off limits to foreign firms such as Roche.
Igen stock has been holding in the upper 50s since the Roche deal was announced and is expected to stay there until the transaction is completed. Then Igen will be renamed BioVeris Corp. and will go back to being what it was before -- a well-managed, well-financed little biotech company with a market value in the $250 million range.
For Igen investors, this is having your cake and eating it, too. They're going to collect $47.25 a share from Roche and for every Igen share will get a share of BioVeris.
It'll be one of the best paydays ever for investors in local biotech companies, whose patience and confidence in the industry have not always been rewarded.
Patience and confidence also bought rewards for investors in Capital One Financial and Marriott International, both of which have methodically recovered from body blows -- self-inflicted at Capital One, delivered by the Sept. 11, 2001, terrorist attacks at Marriott.
During the summer of 2001, Capital One stock plunged from $65 a share to $24.70 when questions were raised about the credit card giant's accounting and potential bad-debt losses.
Analysts who advised long-term investors not to panic turned out to be right. Investors gutsy enough to get in when others were getting out caught a turnaround train that delivered an $8 billion increase in market value. As recently as last March, Washington investors could have bought Capital One stock for a little more than $25 a share. The stock doubled within three months, kept climbing last quarter and now is within $5 of its old high.
Marriott's shares lost almost half their value after the terrorist attacks on the World Trade Center and the Pentagon destroyed the company's downtown Manhattan hotel and devastated the entire lodging industry.
Like Capital One's stock, Marriott shares are still about $5 short of a full recovery. But they are up about 50 percent from their low earlier this year, restoring more than $3 billion to Marriott's market capitalization.
Vacation travelers have resurrected Marriott and other hotel chains. The business travel industry is still soft, weakened by corporate cost-cutting. Cross-country leisure travel is still down because of the reluctance to fly. But this summer, families went on the road, doing regional trips that helped fill Marriott's beds. Lodging analysts predict that as the economy improves, business travel will resume and the industry will continue to improve.
Back-from-the-brink recoveries also rewarded investors in NII Holdings Inc., the overseas operator of Nextel mobile phones, and XM Satellite Radio Inc., the nationwide pay-to-listen service that is rapidly approaching a million paying customers.
NII came out of Chapter 11 bankruptcy protection last November as a $6.50-a-share stock and closed at an all-time high of $65.44 a share Friday. Never mind the percentages, that's 10 times your money in a little more than 10 months, the most spectacular post-bankruptcy performance by any local company that anyone can remember.
Unlike most bankruptcies, in which the original owners are all wiped out, the big players who owned Nextel International have shared in the recovery. They not only owned stock in the company, they owned bonds. The stock did become worthless, but the bondholders wound up owning the company.
The 51.3 percent increase in NII stock last quarter boosted the company's market value to $1.5 billion. Even with that gain, the bondholders have yet to break even because their bonds were originally worth far more than that. The few investors who spotted the stock when it began trading, however, have had an incredible ride.
XM did not go bankrupt, but it came awfully close last fall when it looked as if the company might run out of money before it could turn its innovative technology into a business. Up 20.4 percent last quarter, XM shares are now worth nine times what they were last November when they plunged to $1.75 a share.
High tech and high fashion are the appeal of the two penny stocks that had the biggest percentage returns among local stocks last quarter.
Xybernaut, the Fairfax company known for computers compact enough to be called "wearable," could not be more different from I.C. Isaacs & Co., whose wearables are sold under the Marithe & Francois Girbaud brand.
The Baltimore sportswear maker seems to be struggling back from bad times. Its stock climbed from 48 cents to $1.12 during the quarter -- a 133.3 percent gain.
A quarter million shares a day is heavy trading for Isaacs stock, but the volume in Xybernaut shares hit a mind-boggling 83 million shares Sept. 18, when the stock briefly sold for $2.66 a share.
By the end of the quarter -- just eight trading sessions later -- it was down more than a dollar to $1.64, still good enough to produce a 182.8 percent return for the quarter.
Xybernaut is often the most heavily traded Washington stock, the frenzied trading driven by a daily stream of positive press releases and constant chat on the Internet.
The traders who unload Xybernaut shares when they hit peaks like the latest one are making far more money than the company, for which profits have been as hard to find as weapons of mass destruction in Iraq.
Neither the lack of profits, nor the stock's constant churning, nor the dizzying ups and downs of the price nor the repeated warnings in this column have deterred people from playing the Xybernaut game. Maybe this quarter they will learn, but I doubt it.
3287.99
1275.09