L.A. Gear acquisition continues to cause trouble for Trefoil Capital.

Has turnaround artist and financier Stanley Gold lost his Midas touch?

Gold, 51, chairman of Burbank-based, $450-million-in-assets Trefoil Capital Investors L.P., an investment partnership, is best known locally for his 1991 purchase of a controlling stake in Santa Monica-based sneaker-maker L.A. Gear. And that's the one raising some eyebrows on Wall Street.

Gold and his investors forked over $100 million, or about $12 a share, to gain a 34-percent stake in the ailing shoe manufacturer, which had been founded in 1986 by Robert Greenberg.

By all accounts, the company in 1991 was a mess -- there were mountains of unsold inventory, an ad campaign featuring both singer Michael Jackson saying "oooohhh" and basketball players grunting down the court, plus accounting practices bad enough that shareholders' lawsuits achieved sizable settlements. Many predicted bankruptcy for L.A. Gear, and short-sellers were heavy into the stock.

In that picture, Gold became chairman and chief executive of L.A. Gear.

Now, three years after Gold staked a big wad of Trefoil on the sneaker-maker, things are even worse on Wall Street for L.A. Gear shareholders.

The once-stellar L.A. Gear stock, as of last week, was trading for $7 a share and change, down roughly 40 percent from Gold's 1991 buy-in price, when he assumed leadership of the company.

L.A. Gear's market share of national sneaker sales has been cut in half since Gold took over, from around 12 percent in 1991 to 6 percent today. And the company continues to post net losses, including $14.2 million worth of red ink on sales of $204.7 million in the first half of fiscal 1994, ending Nov. 30. But last week, the company reported net income of $6.5 million on revenues of $126.6 million for the fiscal third quarter.

In June, the chief operating officer brought in by Gold, highly hailed 39-year-old Mark Goldston, resigned. Insiders said Gold pushed him out.

"It seems they are back where they started in 1991, but with the stock way down," said one local stock market observer.

Associates, however, said Gold has no quit in him, and is bound and determined to make L.A. Gear a profitable investment for Trefoil, an investment partnership formed by Roy Disney, the Walt Disney Co. vice chairman.

William Benford, 51, L.A. Gear's executive vice president and chief financial officer, has replaced Goldston. Said Benford, "I think it is fair to say we are all working very hard -- every employee, including Stanley Gold and me -- to turn this company around."

Benford added, "Stanley and I are here all the time."

Said one board member of L.A. Gear recently, "Gold has said he will turn around L.A. Gear if it kills him. He wants to get this right."

Others said, if that is truly Gold's commitment, gallows humor may be in order.

With 37 million shares outstanding (totally diluted, assuming convertible bonds and preferred stock are exchanged for common stock), Gold would have to run L.A. Gear's annual profits up to $30 million or so just to get the stock back to $12 a share, assuming a generous price-to-earnings ratio of 15.

That would still leave Gold's flock of investors at Trefoil a bit behind, due to the time-value of money. In other words, $12 today is not worth $12 of three years ago, if only because the money could have been sunk into T-bills or other yielding investments.

To get Trefoil investors ahead, Gold would have to drive L.A. Gear's stock to, say, $20 a share -- and that would mean propelling L.A. Gear profits to an annual level of around $50 million, again assuming a price-earnings ratio of 15.

Can Gold get those profits?

It is a tall order. L.A. Gear's biggest year ever for sales was fiscal 1990, when it posted $902.2 million in sales. Black ink that year hit $31.3 million.

Analysts are projecting sales this fiscal year of $490 million, and for profits in the second half of the year to balance losses in the first half -- essentially, a break-even year.

What about next fiscal year?

Chief Financial Officer Benford would not say. "It is not our policy to make projections," he said. "The analysts have made projections."

Benford did say that new product introductions at L.A. Gear -- sneakers with lights, and a new athletic series named "FLAK" -- are receiving positive response. Gold could not be reached for comment.

One analyst covering L.A. Gear, Gary Jacobsen of New York-based brokerage Kidder, Peabody Inc., places fiscal 1995 earnings at about $25 million, and 1996's at about $46 million (including a preferred dividend of $7.5 million in each year). If that can be achieved, then Trefoil investors may be on the road to getting their money back.

But another analyst noted that L.A. Gear has yet to make money in the 1990s.

Like other major manufacturers Nike and Reebok, L.A. Gear is essentially a designer and promoter of shoes. Most sneakers sold in the United States are made in South Korea, China or Indonesia, often by the same factories, whatever the label.

"What can L.A. Gear offer that Nike, Reebok or other manufacturers don't also offer?" asked the analyst.