Legendary money manager Peter Lynch wrote a famous book in which he proclaimed that amateur investors could outsmart the professionals by picking their own stocks. If you're half alert you can find great choices right in your own neighborhood, he claimed in One Up on Wall Street.
I wonder if he ever visited the Tampa Bay area.
The cream of our crop, the Times 10, produced two fabulous picks over the past two years. The rest: four subpar performers and four outright bombs. If you were smart enough to pick the two winners, you proved Lynch right. But if you didn't ... well, maybe you should have put a little more distance between your home and your stock picks.
The two years I looked at, from April 2006 to April of this year, was a not-so-great time for the stock market. The Standard & Poor's 500 index rose and then fell, ending up just 5.7 percent higher than where it started. But eight out of 10 of our Times 10 stocks fared worse. The average return for the period: a loss of 11.2 percent.
Our two winners, both from Tampa, stood out:
On top is Walter Industries, the incredible shrinking company riding the energy wave to high shareholder returns. Only 13 years removed from Chapter 11 bankruptcy, the company once considered dumping its underperforming coal mining operation. Now it's shedding other operations instead and reaping the benefits of high energy prices.
Walter spun off its Mueller Water Products division in December 2006 and hopes to offload its home building and finance division by the end of the year. The sharper the focus on coal, the more investors like it.
Gerdau Ameristeel has been able to capitalize on a global construction boom. It's the fourth largest steel company in North America — the second largest small-mill operator — and it keeps on growing. Last year it acquired Chaparral Steel, with locations in Texas and Virginia, and last month it added the assets of Century Steel, with operations in Nevada, California, Utah and New Mexico. A major expansion of its Jacksonville mill is under way. Brazil's Gerdau Group is the majority shareholder.
Then there's the rest of the field. Some of the reasons for poor performance are obvious. When the economy is sinking and gas prices are soaring, a lot of people lose interest in buying a big boat with a gas-guzzling engine. MarineMax feels the pain, and so do its shareholders.
Two companies in the Times 10 have had investigations into possible improprieties that were serious enough to delay filing their financial returns. The dust has settled at Jabil Circuit, which resumed filing, but at WellCare the turmoil is continuing.
Of course these numbers are just a snapshot in time. Stock prices of some of the companies have perked up since I did my analysis. And when you're down, even small gains start to look good.