Standing on shaky ground

Green's portfolio produces spotty returns

The market may have recovered from last year’s seismic third quarter, but some stocks are still a bit queasy. Just ask portfolio manager Isaac Green of Loomis Sayles in Bloomfield Hills, Michigan. Out of the portfolio of five stocks he recommended last year, four have slumped in the erratic environment.

Shares of Carmike Cinemas (NYSE: CKE), a movie chain in Columbus, Georgia, plunged 50.4% since his recommendation. Competition from other movie chains and poor attendance hammered earnings and cleaved the stock price. A weak year for Hollywood and the emergence of multiplex theaters hurt trends in ticket sales, says Green. But he still finds the stock attractive. “Many of the factors that hurt the shares were temporary,” says Green. “Carmike Cinemas is an exclusive operator in 62% of its market and dominant in 81% of its market.”

Sears, Roebuck & Co. (NYSE: S) also proved to be a disappointment. Over the past year, shares of the No. 1 U.S. department store fell 17.4%. By December, the Hoffman Estates, Illinois, concern warned that sluggish clothing sales would result in lower than expected profits. The company’s shares tumbled 3.5% the day management made the announcement.

Pharmaceutical maker American Home Products (NYSE: AHP) fell 25.9% since Green’s last observation. And shares of Hasbro (NYSE: HAS) declined by 20.6% over the same period. The Pawtucket, Rhode Island, toymaker recently acquired Tiger Electronics, which produces the popular Furby.

Compaq Computers (NYSE: CPQ), the Houston-based information and technology company, gained 23.4%, buoyed by strong fourth-quarter earnings. But in early February, Compaq’s shares fell after reports of a predicted slowdown in the PC industry proved accurate. Time will determine the fortunes of these and other highfliers.

A Lackluster Collection

Stock (Exchange: Symbol)

Current Price*

Price at Recommendation

Total Return

Current Value of $1,000Investment

Est. 5-Yr. Annual EPS Growth

Hasbro Inc. (AMEX: HAS) $27.75 $34.94 -20.6%

$ 794

13.7%
Carmike Cinemas Inc. (NYSE: CKE) 16.13 32.50 -50.4

496

10.6
Compaq Computer Corp. (NYSE: CPQ) 32.38 26.25 23.4

1,234

19.9
American Home Products (NYSE: AHP) 68.00 91.75 -25.9

741

12.2
Sears, Roebuck and Co.
(NYSE: S)
46.25 56.00 -17.4

826

12.7
Portfolio Average -18.2%

$4,091

*As of 3/17/99
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