L.A. public companies hit especially hard in slump.

The overall stock market had the rug pulled out from under it last week, but year to date. the stocks of L.A.-based companies have performed much worse.

As of the Sept. 2 market close, the LABJ 100 lost 11.8 percent on the year. By comparison, the Dow Jones Industrial Average had fallen just 1.6 percent, while the Standard and Poor's 500 was still in positive territory, up 2.1 percent for the year.

The LABJ 100 is an index of 100 public companies that represent a cross-section of the local economy. The index is weighted to give more emphasis to large companies, which is one reason it has performed so poorly.

Companies with the largest market caps like Atlantic Richfield Co., Unocal Corp., Occidental Petroleum Corp. and Northrop Grumman Corp. have seen their shares plummet since the beginning of the year. Arco is off 26 percent, Occidental 36 percent, Unocal 19 percent and Northrop 43 percent.

Shares of Walt Disney Co., which has the largest market cap on the LABJ 100, fell 9 percent. Disney stock dropped sharply this summer as several analysts cut their earnings estimates following lower-than-expected results from its movie and video businesses. The stock has since recovered somewhat as "Armageddon" and other late-summer releases turned out better than expected.

Disney and L.A.'s three oil companies comprise just over 40 percent of the total market capitalization of the LABJ 100 - and account for 40 percent of its performance, according to Hal Harrigian, director of corporate finance at Crowell Weedon & Co., which compiles the index for the Business Journal.

Other large-cap companies also have seen their shares fall this year, especially in the real estate sector, where rising property values have made it more difficult for real estate investment trusts to acquire bargain properties. For example, the stock price of L.A.'s largest REIT, Arden Realty Group Inc., has dropped 30 percent since the beginning of the year.

Also, Hilton Hotels Corp.'s stock has fallen 31 percent following a failed effort to acquire ITT Corp., and more recently, the global economy has slowed down.

"L.A.'s biggest public companies just happen to be REITs, oil companies and entertainment companies," Harrigian said. "At least two of those industries - REITs and oil - have been very hard hit, while on the entertainment side, Disney is down nearly 10 percent. So it's no wonder you're seeing nearly a 12 percent decline in the LABJ 100. In fact, had it not been for the excellent performance of SunAmerica Inc. and Computer Sciences Corp., it would have fallen further."

SunAmerica stock was up 55 percent year to date, due in part to the recent announcement that it is being acquired by American International Group Inc. Computer Sciences, which is up 46 percent for the year, specializes in linking computer networks of companies that have just gone through mergers.

Topping the list of biggest gainers was EarthLink Network Inc., an Internet service provider that benefited from the run-up in Internet stocks earlier this year and from its new partnership with Sprint Communications.

Gainers and Losers

Here are the top 10 gainers and losers on the LABJ 100 index
between Jan. 2 and Sept. 1 1998.

Biggest Gainers

Company                    Jan. 2       Sept. 1       Change

EarthLink                   $12.6         $26.8       111.9%
SunAmerica                   42.1          64.9        54.0
Petersen Companies           21.8          31.8        46.3
Comp. Sciences Corp.         41.4          60.5        46.1
Gemstar International        23.5          33.1        41.0
MiniMed Inc.                 39.1          54.8        39.9
Veterinary Centers           13.4          17.2        27.9
99[cents] Only Stores        29.6          37.8        27.7
Viking Office Products(*)    22.4          27.2        21.5
WellPoint Health             42.3          51.3        21.3

Biggest Losers

Company                    Jan. 2       Sept. 1       Change

Maxicare Health             $11.3          $3.3       -71.1%
Cohr Inc.                    12.5           4.2       -66.5
International Rectifier      12.6             5       -60.4
Learning Tree                28.3          11.6       -58.8
Staar Surgical               16.6           6.9       -58.6
Hollywood Park                 22          10.2       -53.7
Sunterra                     21.6          10.4       -52.0
Westwood One                 35.7          18.9       -47.1
Haskel international           12           6.6       -44.8
Smart & Final                18.2          10.3       -43.4

* Viking Office Products was acquired Aug. 27, 1998 and the stock
price was of that date.

Source: Duff & Phelps LLC

Overall, though, the 10 biggest losers tended to have bigger percentage drops than the percentage gains of the 10 biggest gainers. Only EarthLink and SunAmerica posted gains of more than 50 percent, while seven of the 10 biggest losers lost more than 50 percent.

Among the biggest losers were Maxicare Health Plans Inc., Cohr Inc., International Rectifier, Learning Tree International and Staar Surgical Co.

Several of these companies have had internal problems. For example. medical services provider Cohr ran into computer and accounting problems as it tried to expand and has since gone through two rounds of management changes. Learning Tree also ran into problems with its recent expansion attempt, while Staar Surgical failed to obtain patents for its key technologies and has had trouble maintaining growth.

Many of these companies had racked up significant price gains, especially last year, before crashing down to earth in 1998. Investors in these companies, who had grown accustomed to steady gains, are facing the prospect of losses, many for the first time.

Indeed, the prospect of yearly losses is now looking very real in the larger markets as well. And that may be a new experience for many investors.

"We really haven't experienced yearly losses for several years," said Maria Harkness, director of equity investments at Oakwood Capital Management. "Even 1994 eked out a positive return. If we see negative returns, investors need to look carefully and make sure their assets are properly allocated."

Harkness said investors should be giving careful consideration to the international components of their holdings in light of recent global economic troubles. Many portfolios have been heavily weighted toward multinational companies, especially toward companies that have significant operations in the Pacific Rim or other trouble spots.