Led by the suddenly high-flying Midwest Air Group Inc., half of the top-performing stocks of southeastern Wisconsin’s publicly traded companies in 2006 were corporations in the midst of significant change. The best-performing stock in the BizTimes Stock Index in 2006 was that of Midwest Air Group Inc., the parent company of Oak Creek-based Midwest Airlines. Buoyed by December speculation that the company could be acquired by AirTran Holdings Inc., Midwest Air Group’s stock shot up 103.9 percent to close the year out at $11.50 per share.
Although Midwest Air Group’s board of directors rejected the original hostile takeover attempt, AirTran say they’ll be back with a better offer and remain determined to acquire the Wisconsin icon. The Midwest Air Group’s board is retaining an advisor from Goldman Sachs to provide counsel.
“A lot of us would love to see this not happen,” said Karen Monfre, partner in charge of business valuation services with Wipfli LLP, a Wausau-based accounting and business consulting service. “I don’t know how much control the company has to fight off suitors. It will be hard for them to let this not happen.”
Monfre believes AirTran will eventually succeed in acquiring Midwest Air Group.
“The earliest it would happen is in the first quarter, but more realistically, I think it will be sometime this summer,” she said.
Tom Smith, managing director with Mason Wells, a Milwaukee-based private equity fund, begrudgingly agreed.
“The board is doing what it should be,” Smith said. “But personally, I would hate to see my hometown airline (be bought). Having an airline based in Milwaukee is a substantial asset to the city. I can fly to any other major city direct with Midwest. If they’re acquired, any place I want to go will be through the hubs of Chicago, Detroit and Minneapolis. Personally, I would give up the two-across seating if it meant keeping the airline headquartered here.”
In addition to Midwest Air Group, four of the other stocks in the list of the top 10 local performers in 2006 also were stocks of companies in transition or turmoil:
• Magnetek Inc., which ranked second on the local top performer list, restructured and moved its headquarters from Chatsworth, Calif., to Menomonee Falls in 2006.
• Manpower Inc., which ranked fourth on the list, is moving its headquarters from Glendale to downtown Milwaukee.
• Wauwatosa Holdings Inc., the parent company of Wauwatosa Savings Bank, navigated through its first year as a publicly traded company in 2006 and ranked sixth on the local list.
• Oilgear Co., which ranked seventh on the list, was bought out by a group of investors led by Mason Wells Buyout Fund II, Limited Partnership, in December.
The BizTimes Stock Index was created by Small Business Times and is monitored by North Shore Bank. The index, which measures the stock values of publicly held companies based in southeastern Wisconsin, is updated daily and can be viewed at www.biztimes.com.
All but eight of the 36 stocks tracked in the BizTimes Stock Index gained in value in 2006. The eight local losing stocks for the year were: Merge Technologies Inc. (down 73.8 percent); Criticare Systems Inc. (down 39.3 percent); Briggs & Stratton Corp. (down 30.5 percent); Modine Manufacturing Co. (down 23.2 percent); Actuant Corp. (down 14.6 percent); Koss Corp. (down 10.1 percent); Journal Communications Inc. (down 9.6 percent); and MGIC Investment Corp. (down 5.0 percent).
The BizTimes Stock Index began the year at 158.79 points and ended at 177.92, up 12.1 percent. By comparison, the Dow Jones Industrial Average began the year at 10,717.50 and increased 16.3 percent to end the year at 12,463.15; the Standard & Poor’s 500 Index began at 1,248.29 and increased 13.6 percent to close at 1,418.30; and the Nasdaq Composite Index began the year at 2,205.32 and gained 9.5 percent to close at 2,415.29.
Although Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, says the overall American economy will grow by less than 2.5 percent in 2007, he is bullish about the stock market.
“Nevertheless, moderate growth will be good for the stock market. Increasingly, many larger U.S. companies earn significant shares of their profits abroad, even as they jettison workers from good paying jobs at home. Corporate profits will be better than expected, growing in the high single digits, and the stock market should continue to move higher,” Morici said.
Economist Clare Zempel of Zempel Strategic in Fox Point also foresees growth for stocks in 2007. “Economic leadership will be concentrated in exports and business investment. The stock market is still undervalued relative to interest rates. Bonds still seem overvalued relative to economic fundamentals,” Zempel said.
