L.A. small-cap stocks outperform broader indexes.

Despite a slow start in September, the stocks of small public companies based in Los Angeles County dramatically outperformed both the S&P 500 index and a national index of small-company stocks this fall. The L.A. small-company index also slightly outperformed a California small-company index.

Specifically, the Los Angeles Business Journal Small Cap 100, an index of 100 L.A.-based companies with market capitalizations of between $7 million and $70 million, increased 8.7 percent in value for the period Aug. 31 to Nov. 19. The Nov. 19 closing date was chosen to allow trading volatility to die down following Congress' Nov. 17 approval of the North American Free Trade Agreement.

By comparison, the S&P 500 rose a scant 0.3 percent during the fall period ended Nov. 19. The Wilshire Small Cap Index, a national small-cap index compiled by Santa Monica-based investment management firm Wilshire Associates Inc., lost 0.01 percent. And the California Small Cap Index, also created by Wilshire Associates, rose by 8.1 percent.

The performance of the LABJ Small Cap 100 roughly paralleled that of the California Small Cap Index throughout the fall period. Like the LABJ index, the statewide small-cap index includes companies with market capitalizations of between $7 million and $70 million. (Market capitalization is the number of shares outstanding multiplied by price per share.)

But the California index includes 384 California-based companies, whereas the LABJ index includes only 100.

Fueling the relatively bullish improvement of the LABJ index was the strong fall performance of several L.A. media companies. As a group, small L.A.-based media companies enjoyed a 30 percent increase in stock value in the fall period, reported Dave Borger, director of research at Wilshire Asset Management, a division of Wilshire Associates.

The media group represents 13 percent of the LABJ 100 portfolio's total market value, so it can greatly influence the performance of the overall index. But investors would have had to select the right media stocks to have seen a profit, Borger said.

"As you can see, there are several media companies listed in the top 10 performers. But there are also a few that fell into the worst-performers group," said Borger.

One such media company, American Film Technology, suffered such heavy losses that it was forced to file for Chapter 11 bankruptcy protection in mid-October. Subsequently, it closed its headquarters office in Los Angeles and is now headquartered in San Diego.

The media companies appearing in the top 10 are a mixed bag. Westwood One Inc., which had the second-highest return of any company on the LABJ 100, is a producer and distributor of radio programming. Total return on Westwood One's stock between Aug. 31 and Nov. 19 was 190.91 percent.

Showscan Corp., which was the sixth-highest performer on the LABJ 100, with a total return of 62.07 percent, develops and distributes films and equipment for thrill-ride simulators and theaters at sites such as theme parks, world's fairs and expos, shopping centers, resorts, hotels, museums and visitor centers.

The other two media companies appearing in the top 10, dick clark productions inc. and Daily Journal Co., are a television production company and a publisher of a legal journal, respectively.

Daily Journal and dick clark productions realized returns of 45.54 and 51.35 percent, respectively.

The Los Angeles industry that fared best during the fall period was the motor vehicles group, from which the LABJ 100's top performer hails. Wesco Auto Parts, an auto parts retailer, saw its stock price soar 228.57 percent during the period. The per-share price was $5.75 at the end of the fall period on Nov. 19, up from $1.75 on Aug. 31.

Also in the top 10 is another company related to motor vehicles industry, Saugus-based Rexhall Industries Inc.

Rexhall, which designs and manufactures motor homes, saw its stock price rise to $7.50 per share from $4.875 over the two-and-a-half-month period.

Borger pointed out that L.A.-based companies in the motor vehicles category saw an aggregate increase of 60 percent in their stock price between Aug. 31 and Nov. 19.

Motor vehicles companies represent only 1.51 percent of the LABJ 100's total market value, so their favorable showing likely had little impact on the index's overall performance.

Not surprisingly, the industry that suffered the worst stock-price decline of any group on the LABJ 100 was aerospace. As a group, the small-cap L.A. aerospace stocks declined 30 percent over the fall period.

Borger noted, however, that the biggest decline for these stocks came in September. Since then, the aerospace sector has seen a slight uptick in stock price, although that uptick has not been lengthy enough to determine whether it is a trend or an abberation.

Although they did not fare as poorly as the aerospace stocks, L.A. small-cap retail industry stocks also took a dive in the fall. On average, small-cap L.A. retail shares were down by about 13 percent at the end of the period. "We may see a change in that as we move into the holiday season," said Borger.