In a year when layoffs skyrocketed, corporate bankruptcies soared and some of the country’s largest companies were wiped off the map, a handful of local institutions persevered.
Nearly 40 companies across Los Angeles County have a larger market capitalization today than they did one year ago. Six have more than doubled their stock value, while one local oil company is trading at more than seven times what it was last year.
In this annual list, the Business Journal ranks the biggest local public companies by market capitalization as of June 30. A separate list ranks the most profitable.
But it was still a rough year for most local companies, as the United States plunged into a severe recession and more than six years of stock market gains were erased. The cumulative market cap of the 200 largest companies as of June 30 was $324 billion, down 22 percent from a year ago and the second lowest total since the Business Journal began tracking the data in 2002.
“There’s been a tremendous amount of volatility and tremendous amount of decline in stock prices over this last year,” said Dennis McCarthy, managing director of West L.A. investment bank B. Riley & Co. “(But) there certainly has been, in this last three months, a good rebound in a lot of the public stock values. The $64,000 question is what happens the rest of this year.”
Amgen Inc., the biotechnology behemoth headquartered in Thousand Oaks, regained its spot atop the rankings after a two-year absence, narrowly edging out last year’s No. 1, Occidental Petroleum Corp., an oil and gas exploration company that slipped to No. 2 amid a global decline in oil prices.
Amgen was one of only two companies in the top 10 to grow its market cap over the past year, rising a modest 4 percent to $53.6 billion. But in the past year, any gain is something to write home about.
The real estate and financial services sectors, which have been the primary drivers of the country’s economic troubles over the past two years, were unsurprisingly two of the hardest hit industries in Los Angeles since last summer. Real estate companies such as Maguire Properties Inc. and financial institutions including FirstFed Financial Corp. were among the biggest losers across Los Angeles in the past year, each losing more than 90 percent of their stock value.
But companies catering to value-minded shoppers held up comparatively well, as did cutting-edge tech companies. Perhaps more than any other sector, though, companies in the health care field from drug makers such as Amgen to surgical equipment companies such as Emergent Group Inc. held their own amid continued demand for their services.
“If you or I get sick, we don’t care how the economy is doing,” said Greg Range, managing director of the West L.A. office of Duff & Phelps LLC, which provided the data for the Business Journal’s list.
Strong drugs
Nine of the 37 companies whose market cap increased are in either the biomedical or health care industries.
Cougar Biotechnology Inc., a Westwood company developing oncology drugs, saw its market cap jump 82 percent to $893 million. In the process, the company jumped 30 spots on the Business Journal’s list to No. 42.
Hot on its heels is MannKind Corp., a Valencia company developing an inhaled insulin drug that has tested well in clinical studies. Since last year, the company’s market cap jumped a whopping 179 percent to $848 million, pushing MannKind up 40 spots on the list to No. 44.
“The medical industry and the biotech industry is still very important in Southern California,” said Edward Wedbush, president of Wedbush Morgan Securities Inc. in downtown Los Angeles.
At the top of the list, meanwhile, Amgen returned to the spot it held from 2002 through 2006.
The company has taken its lumps in recent years. With safety concerns over its anemia drugs, the company’s stock declined by more than one-quarter between 2006 and 2008.
Over the past year, though, the company has seen promising results from clinical trials for a new drug, known as denosumab or DMab, to treat osteoporosis and bone cancer. As a result, the company’s stock price spiked to nearly $53 per share, a 4 percent rise that translated to a $2.3 billion increase in market cap. Since June 30, when the Business Journal’s list was compiled, Amgen has revealed additional DMab test results that have sent its market cap up an additional 10 percent to nearly $59 billion. The results have some analysts downright bullish.
“The commercial opportunity for DMab in oncology is underappreciated and can drive (Amgen’s) shares toward the high $60s,” wrote Joshua Schimmer, an analyst with Leerink Swann LLC, in a research report. “We believe the oncology indication supports global peak sales in the multibillion-dollar range over time.”
But biotech companies were not the only ones that managed to gain in this difficult year.
As many shoppers have trimmed their budgets, companies that offer inexpensive products, such as Commerce retailer 99 Cents Only Stores and low-cost coffee distributor Farmer Brothers Co., benefited. Farmer Brothers’ market cap increased 8 percent to $368 million, while 99 Cents’ market cap more than doubled to $929 million, which bumped the latter company up 35 spots on the list to No. 39.
The biggest gainer, though, was Vortex Resources Corp., a Beverly Hills oil and gas exploration company. The company, which announced last week that it had changed its name to Yasheng Eco-Trade Corp., had a stellar year amid the continued development of its natural gas drilling operations and talk of a possible merging of some operations with a Chinese company. As a result, the company’s market cap rose 625 percent to $81.2 million.
Another company, Activision, fared well after merging with a division of a French conglomerate to form the world’s largest video game company, Activision Blizzard Inc. The company pulled down the No. 5 spot with a market cap of $16.3 billion.
Rough year
Still, despite the handful of gainers, roughly four in every five local companies lost value. And Vortex notwithstanding, the past year was not kind to most oil and gas companies.
The market cap of Occidental, based in Westwood, dropped by more than one-quarter to $53.3 billion. Even worse, Breitburn Energy Partners LP, based in downtown Los Angeles, lost 72 percent of its stock value, dropping it 36 spots to No. 69 on the list. The company’s market cap stands at $405 million.
Financial services took it on the chin as well.
Four Korean-American banks Nara Bancorp Inc., Hanmi Financial Corp., Center Financial Corp. and Saehan Bancorp each lost more than half of their market cap value as investors worried about the institutions’ outsized exposure to commercial real estate.
Another group of financial institutions fell off the list entirely as they succumbed to the economic turmoil. Countrywide Financial Corp., once one of the county’s largest companies, struggled under mounting subprime mortgage loan losses and was acquired last July by Bank of America Corp. Several other institutions, including IndyMac Bancorp Inc. and Alliance Bancshares California, dropped off the list after being closed by regulators.
More than a dozen local companies lost at least 80 percent of their market cap since last summer.
But analysts said the future for the L.A. economy is brighter than for those of some other cities. The Southern California economy is extremely diverse including significant entertainment, manufacturing, technology and retail industries which should help Los Angeles rebound more quickly than economies in cities dependent heavily on a single sector, such as Detroit with the auto industry.
Indeed, the markets have rebounded somewhat in the past few months, which has benefited a variety of industries, including financial services and industrial companies, said Michael Weinstein, director of research for StockCross Financial Services. What’s more, Weinstein continued, projected earnings over the next year suggest that the markets could continue to rise.
“If these earnings come through the way the analysts currently forecast them to, the market probably has 10 to 15 percent upside from here. I think that’s not unreasonable,” he said. “It’s hard to envision a scenario where the economy is worse than it was in the first quarter of this year.”
HIGH FIVE
1. Amgen Inc.
Market Cap: $53.6 billion | + 4%
Amgen rebounded from a difficult couple of years as a new drug candidate showed promising results in clinical trials.
2. Occidental Petroleum Corp.
Market Cap: $53.3 billion | – 28%
As the price of oil has come down, so too has the share price of this oil and gas exploration company.
3. Walt Disney Co.
Market Cap: $43.3 billion | – 27%
A global decline in consumer spending has cut into Disney’s revenue and profit from its theme parks and film studios.
4. DirecTV Group Inc.
Market Cap: $24.9 billion | – 16%
The satellite television provider saw a drop in profit but grew its subscriber base.
5. Activision Blizzard Inc.
Market Cap: $16.3 billion | + 61%
Activision saw its market cap surge after merging with a French company to create the world’s largest video game company,
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