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Jax Daily Record Monday, Jan. 5, 201512:00 PM EST

2013 market winners turned into losers in 2014

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by: Mark Basch Contributing Writer

The stock market can be fickle. One year, you’re flying high but before you know it, one stumble can send your stock tumbling down.

Stockholders of two Jacksonville companies that were among the big winners in 2013 turned into a couple of the biggest losers of 2014. (See chart below.)

ParkerVision Inc. more than doubled in price in 2013 after a big court victory in its patent infringement lawsuit against Qualcomm Inc. However, stockholders lost all of those gains in 2014 when a federal judge overturned the jury’s verdict. As the lawsuit headed to an appellate court, the stock fell 80 percent last year.

Web.com Group Inc. also doubled in 2013 as new marketing initiatives raised the national profile of the company, but its stock fell 40 percent last year after disappointing earnings reports and forecasts.

However, the biggest loser for a second straight year was Body Central Corp., which lost 97 percent of its value in 2014 after a 61 percent plunge the year before. The fashion retailer continued to struggle with sharply dropping sales, and brought in a new CEO for the second time in less than two years.

Of course, before its sales took a sudden downward, Body Central had been a big success story for stockholders, more than doubling in price from its October 2010 initial public offering through the spring of 2012. As sales started to fall in May 2012, stockholders lost almost all of their value.

Overall for Jacksonville companies, 2014 was a mixed bag, with eight of the 16 companies that traded through the entire year finishing higher and the other eight finishing lower.

The biggest gain was a 79 percent increase for International Baler Corp. However, the recycling equipment manufacturer’s percentage gain represented only a $1.04 price increase during the year to $2.35.

Beyond that, Regency Centers Corp. was the big winner with a total return of 42 percent. Besides strong earnings that sent its stock price higher, Regency shareholders also benefit from consistently strong quarterly dividend payments.

Regency’s stock price has had its ups and downs in its two decades as a public company and while the company cut its dividend after the 2007-08 recession, it has consistently paid quarterly cash dividends.

The shopping center developer paid out $1.78 a share in cash dividends last year, representing a 4.1 percent dividend yield for investors who owned the stock at the beginning of last year. That’s more than double the current dividend yield for the Standard & Poor’s 500 stock index.

It’s not always the increase or decrease in trading price that measures the worth of a stock.

A year of new companies

Looking at local stocks, perhaps the most notable trend in 2014 was the emergence of several new Jacksonville-based stocks.

These companies, with varying degrees of operating histories, became public by merging with existing public companies that were either shell companies or had very small operations.

The most prominent of these companies was Latitude 360 Inc., which operates a 50,000-square-foot restaurant and entertainment facility on Philips Highway, across from The Avenues mall on Jacksonville’s Southside.

Latitude 360 currently operates similar venues in Pittsburgh and Indianapolis and is looking to expand with additional venues in three other cities in the coming months.

The company reported revenue of $3.7 million and an operating loss of $4.2 million for the third quarter, its first full quarter after going public.

Latitude 360’s stock finished the year priced at $1.15, but three other Jacksonville-based companies that became public in 2014 were trading below $1 as the year ended.

Drone Aviation Holding Corp. produces specialized lighter-than-air aerostats and tethered drones. In its first full quarter as a public company, it reported revenue of $328,063 and an operating loss of $947,179 in the third quarter.

NAC Global Technologies Inc. manufactures and supplies harmonic gearing technology, which is used for precision motion control applications. It reported revenue of $118,944 and a net loss from operations of $376,809 in the third quarter.

MV Portfolios Inc. describes itself as an “intellectual property investment, development and licensing company.” It reported no revenue for the quarter ended Sept. 30.

Spinoffs also creating new stocks

Two other new Jacksonville-based companies were created by spinoffs from existing public companies.

Actually, to be more precise, two new Jacksonville-based stocks were created because of one of the new stocks, Fidelity National Financial Ventures (FNFV) is actually still a subsidiary of parent company Fidelity National Financial Inc. Fidelity creating a tracking stock that represents the interests of FNFV.

In the ever complex world of Fidelity and its various business interests, it can be difficult to calculate how well Fidelity stockholders did in 2014.

Fidelity stockholders received one share of FNFV at the end of the second quarter for every three shares of Fidelity they owned, but that wasn’t the only new stock they received.

At the end of the year, stockholders were issued 0.17879 shares of Remy International Inc. for every FNFV share they owned.

Remy is an auto parts company that was majority owned by Fidelity. When Fidelity formed FNFV as a subsidiary to hold its non-real estate-related investments, Remy was put into FNFV. Last week, FNFV distributed its Remy shares to FNFV stockholders, so Remy is now a separate public company. Or to look at it another way, Remy was spun off from Fidelity’s spinoff.

Anyway, Fidelity shareholders who did nothing but collect shares of the spinoffs, plus cash dividend payments, saw a total return of 28 percent in 2014 on the shares they held a year ago.

The other spinoff didn’t go so well, as Rayonier Inc. spun off its performance fibers business as a separate public company called Rayonier Advanced Materials Inc.

Rayonier AM’s stock fell after the midyear spinoff due to disappointing earnings and oversupply issues in the cellulose specialties market.

Rayonier Inc.’s stock fell after the split as new management reassessed the value of its timberland holdings and its strategy for those holdings.

By the end of the year, Rayonier Inc. stockholders saw the return from their shares – including the value of Rayonier AM shares they received and dividend payments — fall by 12 percent.

By the way, in case you missed it, there are more spinoffs coming in 2015 from the Fidelity family of companies.

Fidelity last month filed for an initial public offering of its mortgage processing and analytics subsidiary, Black Knight Financial Services. That followed an IPO filing in October by J. Alexander’s Holdings Inc., a restaurant business controlled by FNFV.

Knowing Fidelity, we could always see more spinoffs this year.

Patriot-FRP split set for Jan. 31

Speaking of new Jacksonville-based public companies created by spinoffs, the long-awaited split of Patriot Transportation Holding Inc. and FRP Holdings Inc. into two separate companies will finally happen at the end of this month.

It’s long awaited because the transportation and real estate business first discussed splitting in two in 1999, so this has been more than 15 years in the making.

The company last week announced that split will formally take place on Jan. 31.

The company, originally named Florida Rock & Tank Lines Inc., was formed in 1986 as a spinoff of the trucking and real estate operations of construction materials company Florida Rock Industries Inc.

Florida Rock & Tank Lines changed its name to FRP Properties in 1989.

When the company first contemplated splitting up the trucking and real estate businesses, it changed its name to Patriot Transportation, with plans to keep the FRP name for the real estate company.

The split was called off in August 2000, but the company retained the Patriot Transportation name for the entire operation.

In a reorganization last month, the holding company went back to the FRP name, which will remain the name of the real estate business. The trucking company will be spun off under the Patriot Transportation name.

FRP Holdings will distribute shares of the new Patriot to its stockholders of record on Jan. 9. Stockholders will get one share of Patriot for every three shares of FRP they own as of that date.

The new Patriot shares will be distributed on Jan. 31, but will begin trading this week on a “when issued” basis under the ticker symbol “PATI.”

FRP will continue trading under the ticker “FRPH.”

FRP will be a commercial real estate company that develops properties mainly in the Baltimore-Washington-Northern Virginia market, as well as Jacksonville.

Patriot will provide trucking services mainly for petroleum companies in the Southeast.

APR falls on loss of Libya business

Another Jacksonville-based company which fell sharply in 2014 was APR Energy PLC.

APR, which builds interim power plants around the world on a fast-track basis, is headquartered in Jacksonville but its stock trades on the London Stock Exchange.

The stock fell steadily throughout the year, ending 2014 down 79 percent, but it fell particularly hard in late December after announcing it was suspending its operations in Libya. APR said in a news release that the “ongoing geopolitical challenges in the country” delayed ratification of a contract in Libya.

The company still expects to report revenue of $490 million for 2014, but the loss of the Libyan contract will reduce its profit margin. APR also said that “given the various moving parts regarding the Libya contract, it is too early to comment on financial guidance for next year.”

APR’s stock fell 23 percent from that Dec. 23 announcement through the end of the year.

CompanyReturn
International Baler79%
Regency Centers42%
CSX28%
Fidelity National Financial28%
Landstar System27%
Fidelity National Information18%
Stein Mart11%
EverBank Financial5%
Jacksonville Bancorp-3%
FRP Holdings-6%
Atlantic Coast Financial-8%
Rayonier-12%
Web.com Group-40%
APR Energy-79%
ParkerVision-80%
Body Central-97%

 

 

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