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2009 ECONOMIC SURVIVAL GUIDE By Alison Trinidad

Buy Them Before They Rebound
By Mark Basch - The Times-Union       October 27, 2008
   It's hard to find a good stock these days. More than 90 percent of the companies in the Standard & Poor's 500 index have dropped in value over the past year. But even in a recession, some businesses continue to do well. Their stocks may fall because of investor nervousness, but that doesn't mean the company is doing poorly.
   In fact, analysts are recommending investors purchase a lot of stocks that are based in Jacksonville or have large local operations. Of 38 companies in the Bloomberg Jacksonville stock index that are rated by analysts, 29 of them have positive ratings, according to Thomson Financial. That's based on Thomson's scale of 1 to 5 where a 1 rating means "buy" and 5 rating means "sell."
   We asked a couple of local investment experts for their favorite Jacksonville stocks in this tough environment.  Mark Travis, president and CEO of Intrepid Capital Management in Jacksonville Beach, said he likes companies that have low debt and lot of assets. "I would look at St. Joe and Rayonier," he said. The St. Joe Co. owns a large amount of Florida land and Rayonier Inc. has large timberland holdings. Although the companies may have trouble selling property now - St. Joe has the worst average analyst rating of any Jacksonville company at 3.5, according to Thomson - their assets make them valuable long-term plays.
   Travis also likes Patriot Transportation Holding Inc., which is known mainly as a trucking company. But in addition, it owns valuable real estate in the Washington. Daytona Beach-based International Speedway Corp. is also worth a look, Travis said. Its stock is down on expectations that the weak economy will hurt ticket sales for the company, which owns the Daytona International Speedway and 12 other motorsports facilities. But Travis said the bulk of its money comes from NASCAR television contracts. "What really matters is they've got five-year TV contracts," he said. And despite the financial meltdown, Travis said his firm's funds also own shares of community banking company Jacksonville Bancorp Inc. "We think that will do fine over time," he said.
   But overall, bank stocks continue to be risky, said Tim Cebulko, partner at St. Nicholas Private Asset Management in Jacksonville. "I wouldn't be tempted to bottom fish at this point," he said. Some of the big banking companies that are making acquisitions, rather than being bought out, could be worth a look, such as JPMorgan Chase & Co. and Wells Fargo & Co. "I'd stick with the ones that I know are going to be survivors," Cebulko said. 
   Some other companies make good defensive plays, Cebulko said. "I think the safest name on the list is Johnson & Johnson," he said.  The New Jersey-based health and medical products company, which owns Jacksonville-based contact lens maker Vistakon, is seen by analysts as somewhat recession-resistant. People still buy health products regardless of the economy.
   Cebulko also likes defense contractor Northrop Grumman Corp., which is locked into some big government contracts, and discount retailer Wal-Mart Stores Inc.  Cebulko said large capitalization stocks seem to be a safer bet in this environment.  "I'd err on the side of caution," he said.

Recession? Maybe. What it means ...
By David Bauerlein and Diana Middleton/The FloridaTimes-Union  

January 23, 2008
   That big thud you heard Tuesday morning came from Wall Street when the Dow Jones Industrial Average fell 465 points at the start of trading after the Federal Reserve announced an emergency three-quarters of a percentage point interest-rate cut. We try to break down what it means on the First Coast.
   What happened? The Federal Reserve cuts a key interest rate by 0.75 percentage point. The Dow Jones index plummets by as much as 465 points but rallies to end down only 128. How Wall Street's dizzying day affects you:
   What is a recession? It's a period of slow economic activity. More specifically, it entails two back-to-back quarters of declining or negative gross domestic product growth. According to the National Bureau of Economic Research, income, employment, industrial production, and retail sales also suffer significant declines during that period.
   Are the country and Northeast Florida in a recession? Depends on whom you ask. The National Bureau of Economic Research, which tracks economic recessions and expansions, doesn't report a recession until six to 18 months after it has begun. The organization does not release forecasts, and so far, it has not officially categorized the current economic turbulence as a recession. But Sean Snaith, an economist at the University of Central Florida, says it feels like one. "In terms of overall sentiment around the economy, you could assume we are already mired in a deep recession," he said. "The most recent hard data, such as job growth, show that there's a slowdown, but it's not quite the level of a recession." 
   Should investors change their strategies? No, said Tim Cebulko, President of St. Nicholas Private Asset Management in Jacksonville. "Stocks are long-term investments," he said. "The payoff period is three to five years, not three to five weeks." He said he expects a "bottoming out" of the market over several weeks, with "continued volatility" as the economy grows but at a slower pace. Jeffrey Camarda, chief executive officer for Camarda Financial Advisors in Orange Park, said it's a good time for investors to diversify their portfolios.
   Will the Fed's rate cut make it easier to refinance? Not directly, said Patrice Yamato, past president of the Florida Association of Mortgage Brokers. Yamato, president of Plaza Mortgage Group in Jacksonville, said the rate cut could have a ripple effect on the bond market, which would result in already-low interest rates for mortgages dropping more. Yamato pointed to a 30-year mortgage with a 5.5 percent fixed rate. She said with deals like that available, homeowners with adjustable rate mortgages should take advantage of refinancing at fixed rates.
   What jobs are affected? WorkSource, a local group that provides companies with job candidates, is bracing for a recession, according to Candace Moody, executive vice president. Jobs in the financial, mortgage and real estate-related industries (such as Realtors and construction workers) will be among the first on the chopping block, she said. Retail and service companies will also feel the pinch, and middle management will also be vulnerable.
   Will businesses get more access to loans? The Federal Reserve's action won't necessarily result in credit becoming more available to business owners, said Robert Myers, director of the Small Business Development Center at the University of North Florida. He said in the past year, small businesses have faced a tougher time qualifying for loans. If a business owner was turned down for a loan last week, they probably are still in the same situation, he said. Lenders won't lower their criteria for making loans, but the Federal Reserve's action Tuesday will make it easier for banks to borrow from each other, giving them more access to money for loans, said John Turpish, chief financial officer for VyStar Credit Union in Jacksonville. He said the biggest stimulus for businesses could be the package of tax breaks being considered by Congress.
   What about car loans and credit cards? Turpish said in general, the Fed's action will have an across-the-board impact in lowering interest rates for consumer loans. He said home equity loans are closely tied to where the Federal Reserve sets benchmark rates.

Taking the long-term view
By ALLISON TRINIDAD   August 19, 2007

   Wall Street has been on a roller coaster ride this last month, with almost all the major U.S. stock indexes down 10 percent from recent highs. We asked Times-Union readers how they're handling their investments, given the emotional highs and lows on the trading floor. More than 100 readers responded. Most described themselves as long-term investors, and are either staying put or buying more shares of the companies with which they've already invested. While some sold off some shares earlier in the year, only one reader said he was selling, and just his high-risk stocks, at that. Financial advisers in the area said they aren't overly worried, and are counseling their clients to stick it out.
   'I just tune out all the noise'     The  recent drop in the stock market has been enough to make me feel a little uneasy, and I hate to see my 401(k) take a big hit. The market has experienced these ups and downs and corrections throughout its history. Either you run for the hills and miss out on the next big run-up or stay put and ride it out until things settle down. My livelihood isn't based on what the market does day to day, so I just tune out all the noise and remember that over time the market provides an 8 to 10 percent return.     Wayne Mattox, 57,   Orange Park
   'What goes up must come down'     Those who are knowledgeable about the stock market are aware that what goes up must come down.  If it was a good holding when the market was up then you do not sell when it drops in price; it will go back to where it was and maybe higher. One thing remains the same and that is the fact that it will go back up and will fall; over and over again.     Fran Stevens, 81, Lakewood
   'I can't imagine the pressure'     The volatility in the stock market today directly affects this years' retirees.  I work in corporate America, but my retirement is 20 years away, so today's market mayhem bears little impact on me personally. However, if you are retiring this year, the stress must be almost unmanageable    If you are not retiring for some time, I strongly suggest a very diversified 401(k), if this is the investment tool relied upon for retirement. Perhaps one would do well to consider other options.     Christopher Jon Batis, 46,   Northside
   'You've got to have staying power'     More than anything else, if you've invested with good companies, you stick with them, although it's painful. When there's cash, we're spending it. The one who bears the brunt of this is the typical brokerage client. You've got to have staying power.     Palmer Knight,   The Palmer Knight Co., Five Points
   'There are definite concerns'     There are definite concerns, but my investors tend to be in it for the long term. I've been in the business for 30 years, and when people panic, they usually live to regret it. Day traders, they're in for a real rough road.     Mike Lawrence, Lawrence Financial Services, Mandarin
   'We've got to be proactive'     It's always a challenge for anyone to focus on the long term when there's so much volatility in the near term. We guide our clients through any near-term volatility in the market so they can achieve their long-term goals and dreams. Our advisors are in contact with their clients - we've got to be proactive in times like these.    Brian McKenna, Smith Barney, Ponte Vedra Beach
   'This too shall pass'     In a fairly strong economy, you stay the course. Although short-term volatility is hard to watch, it's a natural occurrence. This too shall pass. When we've had the opportunity, we've used it as a buying opportunity. Some clients are more sensitive than others, and we try to stay in touch with those.     Tim Cebulko, St. Nicholas Private Asset Management, Southpoint

12,000

What does the Dow's latest record really mean? Area investment experts vary from optimism to ambivalence.

By ANGELA DRYDEN, The Times-Union 10/22/06
As the Dow Jones industrial average closed above the 12,000 mark for the first time Thursday, the Times-Union asked several investment experts around the First Coast for their views on the Dow's climb, its future and whether all the attention the index has been receiving is justified.
'It's just a number'
"I think the media is making it a much bigger deal than it is," said Tim Cebulko, a partner with St. Nicholas Private Asset Management. "It's just a number - realistically, that's what it is."
Cebulko said unlike the S&P 500, the Dow has more of a psychological effect on investors. In one sense, it may be a bit of relief that the Dow  hit 12,000. But the astonishing part, he said, is that it took this long.
And, he said, until something slows the economy down, it's a pretty rosy situation, and the Dow isn't overvalued unless the economy goes into a recession.

Cautiously optimistic
When asking questions about the short term, you have to rely on structural elements of the economy, said Jeffrey Helms, CFA, managing partner, First Coast Financial Advisors LLC. Helms believes there are three, maybe four, structural economic elements to show things are brighter than in the past. "We're as cautiously optimistic as we've been for some time for a couple of reasons," Helms said. One element: The Treasury recently released its budget estimate, and it is lower than expected. Second, interest rates are modifying and the deficit is going in the right direction; meanwhile, interest rates are still good. The third element, said Helms, is that Fed rates are up, so more money is going into federal tax coffers. And finally, he says, the 2003 tax cuts, which he believes increased incentives for the economy.As for the stock market, Helms said corporations' pretax profits have doubled and, coupled with large growth, the market is poised to continue its growth path, he said.
Relying on voracious spending
Still some might say the voracious consumer spending that has been driving companies' profits will come to a halt, especially if wages don't increase. That's what Jayme Wiggins, CFA, portfolio manager, Intrepid Capital Management, believes. "Well, everyone's happy when the market's going up," Wiggins said. But, he advises people take a step back and not get caught up in the excitement. He doesn't believe consumers can continue in this way - and if they can't, this will have a negative effect on the economy. If the economy slows, he said, top Dow performers like General Motors, Caterpillar and Exxon Mobil will slow, too. "People celebrate when the Dow reaches 1,000 point increments, but what really matters are valuations," Wiggins said by e-mail. "If a stock is too expensive based on its normalized earnings power, it shouldn't be bought. If someone doesn't know how to determine what a company is worth, then they also shouldn't buy it."
'Indices are unpredictable'
"If the current economic fundamentals stay in place, the trend toward investment in quality companies will continue," said Christopher Zebroski, managing director of Legacy Trust Co., by e-mail. "Our clients' portfolios have been positioned for this market trend with an overweighting in large cap stocks for the past several months." Still, Zebroski says, "indices are unpredictable." In any market cycle, "bets on short-term market moves and concentrated stock positions are the most vulnerable," he said. Zebroski believes the Dow will go beyond 12,000 and says when the hype over the number is put into historical context, it is justified. "It has only been five short years since the attacks on 9/11," said Zebroski. "We are fighting a global war on terror and we now have great GDP growth, low unemployment, declining trend in oil prices and an overall robust domestic economy."

FIRST COAST TICKER: Area banks deposit record quarters 10/02/06
   Jacksonville stocks lagged behind the rest of the market in the third quarter, but don't blame the local banks. The two publicly-traded banking companies based in the Jacksonville area, Atlantic BancGroup Inc. and Jacksonville Bancorp Inc., both hit record highs in the quarter. Atlantic, the parent company of Oceanside Bank, reached its record of $41 on Friday. Jacksonville Bancorp, parent of The Jacksonville Bank, hit its record of $38.99 in August. There's been no news events to push the stocks higher, and the two small banks don't have analyst coverage. But investors have been buying bank stocks recently.
"Banks in general have attracted a little bit of interest," said Tim Cebulko, partner at St. Nicholas Private Asset Management in Jacksonville.
Bank stock rallies are often tied to takeover speculation, as bank mergers seem to happen in waves. But the recent rally seems more tied to a better interest rate environment, Cebulko said.
   The Nasdaq Bank Index (which includes both Atlantic and Jacksonville Bancorp) hit a record high on Sept. 21, a day after the Federal Reserve Board decided not to raise short-term interest rates. Increases in short-term rates earlier this year had been squeezing profit margins for banks, so the prospect of steady interest rates in the foreseeable future is making investors feel better about bank earnings.
Despite the success of the local banks, the Bloomberg Jacksonville Index of 50 companies based in or with major operations in the Jacksonville area, didn't measure up to the rest of the market in the third quarter. The Bloomberg Jacksonville Index rose about 3 percent in the quarter, while the Dow Jones industrial average and the Standard & Poor's 500 index both rose more than 5 percent.

Orlando produces 41,000 new jobs
Metro area's jobless rate sinks to 3.1% in June -- down from 3.8% a year ago

Tim Barker | Sentinel Staff Writer
Posted July 22, 2006
   The Orlando metro area added more than 41,000 new jobs during the 12-month period ending in June, helping the state maintain its position as one of the nation's leaders in jobs production.  During that period, the state posted a growth rate of 3.5 percent, more than double the national average of 1.4 percent, according to data released Friday by the Florida Agency for Workforce Innovation.
   The June report continues a period of steady growth that started in September 2002. Job growth has been led by several sectors, including construction, retail, administration and leisure.
   "Florida's got the things that attract not only individuals, but job growth," said Tim Cebulko, a partner with St. Nicholas Private Asset Management in Jacksonville.
   The state's unemployment rate for June fell to 3 percent, down from 3.8 percent at the same time last year. The unemployment rate in Orlando was 3.1 percent, compared with 3.8 percent a year ago.  The nation's unemployment rate was 4.6 percent.
   As has been the case throughout the state's job boom, the Orlando-Kissimmee metro area was one of the state's top job producers. During the year that ended in June, it trailed only the mammoth Miami-Fort Lauderdale-Miami Beach metro area, which added 60,500 jobs.  Across the state, 8.65 million Floridians had jobs, leaving another 270,000 unemployed.

Originally created Monday, May 22, 2006

The nuts and bolts of Fidelity's 'pragmatic' re-reorganization
Even the company's CEO admits its changes have been confusing, but at the end of the day, it all came down to the shareholders.

By MARK BASCH, The Times-Union
   A month ago, Bill Foley stumbled a bit when asked to provide a quick explanation of the three Fidelity companies he runs. Two of them were easy: Fidelity National Title Group Inc. is a title insurance company that was set up to be a value stock with a high dividend; Fidelity National Information Services Inc. provides transaction processing services and was set up as a growth stock..  But Foley hesitated when he tried to describe Fidelity National Financial Inc., a holding company that owns a majority interest in the title insurance and information services companies. He couldn't easily describe it.
   "I thought that was interesting. I don't even know what FNF is," Foley said last week. Fortunately for Foley, the chairman and chief executive officer of FNF and also chairman of both the title company and the information services company, that problem is going away. The Fidelity companies announced a reorganization at the end of April that will transform its current structure of three public companies, all based in Jacksonville, into two. One company called Fidelity National Financial, or FNF, will consist of the title insurance and other insurance-related businesses. The other company called Fidelity National Information Services, or FIS, will operate the transaction processing businesses.
   But it's not quite that simple. This restructuring was announced less than two months after the Fidelity companies completed another major overhaul in which one public company was parceled into three. And now the company is being recombined into two? "There's a lot of confusion. But if you look at the way we were structured, there was a lot of confusion before this," Foley said.
   Analysts and investment managers say the latest structure seems to be the best for the Fidelity businesses. But the process of getting there may leave some people scratching their heads. "I think it makes a lot of sense to do it," said Jeffrey Helms, managing partner of First Coast Financial Partners in St. Augustine.  "If there's any investor uncertainty, I think that uncertainty will be driven by the frequency of the transactions, rather than the wisdom," he said.
   "I think there's a little bit of eyebrow-raising on the surface," said Tim Cebulko, partner at St. Nicholas Private Asset Management in Jacksonville. "Did they make a mistake [with the first restructuring]? That may be the question that's looming a little." But Cebulko said companies have a duty to stockholders to maximize the value of their shares, and analysts are in agreement that the new structure of two separate public companies is the best way to achieve that goal.
More than title insurance
   When Fidelity National Financial moved its headquarters from Santa Barbara, Calif., to Jacksonville three years ago, the company was known mainly as the nation's largest title insurance company. But title insurance is a cyclical business that goes up and down with the mortgage market. When interest rates are low and mortgage activity increases, business is good. When rates rise and the mortgage market slows down, the title business slackens.
   So in an attempt to make the company's earnings more consistent, Fidelity was expanding into other businesses that are less prone to cycles, namely the information services business. That operation consists of companies that provide data processing services mainly for financial companies, including a Jacksonville-based division that processes more than half of all mortgage loans in the United States. Fidelity acquired the mortgage business from Alltel Corp. in 2003 and the company liked Jacksonville so much that it moved its headquarters to the mortgage company's Riverside Avenue office complex later that year. While the expansion of the information services business did help Fidelity's earnings grow, it didn't help the stock as much as Fidelity officials hoped because investors still thought of the company as a title insurer. So the company in 2004 began looking for ways to increase returns for shareholders by spotlighting the value of the information services business. Through a series of transactions, it ended up with a new structure in which FNF was a holding company owning interests in several businesses, including a majority stake in two companies that were publicly-traded themselves: FIS and Fidelity National Title, or FNT.
   "We liked having that structure," said Foley. But it didn't achieve its goal of increasing shareholder value. While the company's value in the market was about $6 billion, Foley estimates there was about $1.7 billion in additional value that was not reflected in the stock. "The company's plan to have three publicly-traded subsidiaries with the holding company, a processing operation and a title company proved to be too complex for investors to easily analyze," said a report by Raymond James & Associates analyst Michael Vinciquerra.
Re-reorganization, ho!
   So, two months after completing the first restructuring, Fidelity announced a new plan. Through a complex series of transactions, the three publicly-traded companies will be reorganized into two. They will both be headquartered at Fidelity's Riverside Avenue complex, but will be completely separate. FNF owns 51 percent of FIS, but in the new structure, that 51 percent stake will be distributed to current FNF shareholders and the company will have no interest in FIS. FNF also owns 82.5 percent of FNT but the restructuring will create a "new" FNF which owns 100 percent of the title insurance business. The new FNF will also own several other specialty insurance businesses currently owned by FNF, including flood insurance and home warranty insurance. It will also own a 40 percent stake that FNF recently acquired in Sedgwick SMS, an insurance claims management company.
   "In the end, the simplest structure for the company appears to be the best. Management's intentions with the previous maneuvers were certainly done with the right intentions in mind, but in essence did just the opposite," said Vinciquerra's report. "We're not trying to bash management in any sense and in fact, we applaud the pragmatic decision to admit their previous moves simply didn't work and to move back in the other direction. It was the right move, and the market reacted quite positively," he said. FNF's stock rose $8.51 to $43.50 the day the deal was announced.
   Foley said he wasn't expecting to restructure the businesses so soon. In fact, he points to a series of transactions in March when he exercised options to buy more than 400,000 FNF shares and immediately sold them. He cost himself more than $3 million by selling those shares in March, before the stock went up in April with the restructuring announcement. "Obviously I didn't know anything about it," he said. He said the restructuring decision emerged while company officials were considering a way to distribute FNF's shares in FIS to its shareholders tax-free. In mid-April, they came to the conclusion that the overall restructuring of the three companies was the best solution. "Once we talked about it, everyone was in favor of it," Foley said.
   The restructuring announcement hasn't helped FIS's stock, which has been little changed in the last month. But analysts think the moves will eventually be a positive for the information services business. "While the corporate restructuring at FNF and potential secondary share offering may continue to weigh on the [FIS] stock, we believe the fundamental outlook remains strong," said a research note by Credit Suisse analyst Paul Bartolai. "A newly independent FIS will offer investors the benefit of increased liquidity, and as a fully independent company it will have the flexibility to pursue its own independent strategies," said a note by Goldman Sachs analyst Julio Quinteros.
Employees remain unaffected
   The restructuring won't have a big impact on Fidelity's employees in the three companies. Some job titles may change, but everyone's job function will remain the same, Foley said. "None of the players are changing," he said. "The personalities are taken out of this transaction." Foley will continue as chairman and chief executive of FNF and will also become executive chairman of FIS. Current FIS chief executive Lee Kennedy will continue in that position. FNT chief executive Raymond "Randy" Quirk will continue to run the title insurance business but he will have a different title, because the title business won't be a separate company. "Randy will be a senior officer of FNF," Foley said.
   The restructuring also won't affect Fidelity's expansion of its Riverside Avenue complex. Fidelity acquired a 13-story building when it bought the Alltel business, and that building will continue to house the headquarters of both FNF and FIS. Meanwhile, a new eight-story building at the site is nearing completion and over the next few weeks, workers for the Fidelity companies that have been located at temporary space in the Deerwood section of Jacksonville will move into the new building. By the end of 2007, Fidelity expects to have more than 3,300 workers at the complex. It had 1,400 Jacksonville employees when it acquired the Alltel mortgage business.
   And Foley dispelled rumors in the community that the company might move its headquarters back to California. Foley and a handful of other top executives, including FNF President Brent Bickett and Chief Financial Officer Al Stinson, do have homes in California and will be spending a lot of time there. And Foley plans to spend most of this summer at his ranch in Montana. But Jacksonville will continue to be the companies' headquarters."I intend to remain a Florida resident," Foley said. The only significant change in the Fidelity businesses will be the simplified structure. "This, I think, makes my life easier," Foley said.
   "It was really kind of a fouled-up structure. I think it's going to be great."

Foreclosures climb nationally
Florida has drop, but default rate still high

Tim Barker | Sentinel Staff Writer
Posted April 28, 2006
   Home-foreclosure rates soared nationwide in the first quarter as consumers grappled with the rising costs of living. And while Florida recorded a decline in foreclosures, the state still has one of the 10 highest foreclosure rates in the nation, according to a recent report by RealtyTrac.  The first three months of the year saw a 72 percent increase in nationwide foreclosures, compared with the same period of 2005. That's a rate of one for every 358 U.S. households. In Florida, the rate declined 14 percent -- a rate of one for every 247 households.
   Economists said a variety of factors -- including rising gas prices, interest rates, property taxes and insurance rates -- are impacting foreclosures. Many of those expenses will only get higher.  "Consumers have a lot of payments they have to make and a significant number of those are rising," said Bob Allsbrook, chief economist for AmSouth Bank.  In the seven counties of Central Florida, foreclosure rates fell 5 percent during the quarter, according to the report. Three counties, however, did show increases: Lake, 16 percent; Polk, 4 percent; and Orange, 2 percent.
   Also filtering into the housing picture now is the impact of the creative-financing tools used by many consumers to buy homes during the recent housing boom. It was not uncommon to see homebuyers using interest-only or adjustable-rate hybrid loans that offered lower initial payments.  The problem for those buyers is that higher rates are starting to kick in, raising monthly payments, sometimes by hundreds of dollars. That's putting more pressure on household budgets.
   "It doesn't take much. One spouse loses a job or is unemployed for even a little while," said Scott Brown, an economist with Raymond James & Associates in St. Petersburg.  Still, Florida continues to be bolstered by its strong economy and job growth. But that could be threatened if foreclosure rates do increase inside the state.
   A significant portion of the economy is fueled by population growth and the building of the infrastructure to support it. The construction sector has been one of the strongest drivers of job growth.  Rising foreclosures would put more homes on the market, said Tim Cebulko, a partner with St. Nicholas Private Asset Management in Jacksonville.  "You won't have as many homes that have to be built," Cebulko said.

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Florida economy shining in survey
Nineteen of its cities are rated among the best for entrepreneurs and owners of small businesses.

Tim Barker | Sentinel Staff Writer
Posted April 27, 2006
   Florida's booming economy has turned the state into a haven for entrepreneurs.  Inc. magazine's 2006 ranking of U.S. business cities included 19 Florida cities in the top 100, with Orlando at No. 28. The magazine's rankings, which are being released today in its May issue, are based on job-growth patterns and are designed to highlight the best cities for entrepreneurs and small-business owners.
   The state's strong showing should have been expected, said Mark Vitner, senior economist for the Wachovia Corp.  "I really can't recall a time in history when the Florida economy was as strong as it is today," said Vitner, who follows the state's economy.  Bolstering the state is a strong population growth, diverse geography and exploding job market. Florida has been creating jobs more than twice as fast as the national average.
   In the year ended in March, the state's nonagricultural job ranks increased by 4 percent. The national average was 1.6 percent, according to the state's latest jobs data.  Although there are many factors that could be used to evaluate individual cities, the magazine said job growth is a strong measure of a region's economic health.  "Job creation suggests strong demand. Strong demand suggests opportunity," said Larry Kanter, an Inc. editor.
   For  the small-business  owner,  growing cities like those found  throughout Florida  can be ideal.   "A coffee shop. Oil-change franchise. Carwash. You stick those in the middle of a growing community, and you'll have customers," said Tim Cebulko, a partner with St. Nicholas Private Asset Management in Jacksonville.
   For Orlando, though, there was one bit of bad news in the magazine's 2006 rankings.  Way up at the top of the list -- at No. 7 -- is Port St. Lucie, the other Florida community that is trying to lure the Burnham Institute biomedical-research company.  Still, that shouldn't have a noticeable impact on the competition, said Vitner, the Wachovia economist. The magazine's rankings have more appeal to small businesses than large corporations, he said.

Originally created Thursday, April 20, 2006

CSX Corp. chugging right along, latest results show

By TIMOTHY J. GIBBONS, The Times-Union
   A first-quarter performance buoyed by strong demand and more efficient operations puts Jacksonville-based railroad CSX Corp. in a strong position for the rest of the year, a period in which it plans to add about 500 employees to its workforce. Although the company's rail cars carried less in the first quarter of 2006 than they did a year ago, the company made more money on those loads, hiking its rates by more than 5 percent. Volume was lower mainly due to a sharp drop in the amount of phosphate it carried for short distances. But that business doesn't pay as well as the other lines in which CSX saw the growth that boosted the bottom line.
   The company's performance was also boosted by the railroad operating more efficiently. CSX's operating ratio - operating expenses divided by revenues, a key metric used by the industry - improved to 79.1 percent, inching the company into the range executives have said they are aiming for. "Every key measure in operations saw solid to substantial improvement," Michael Ward, CSX's chairman, president and chief executive officer, told analysts Wednesday.
   Those results led Bear Sterns analyst Edward Wolfe to call CSX "the most compelling rail value on a price-to-past-peak basis" in a research note released Wednesday. Wolfe had expected the company to post an operating ratio of 81.2 percent. Still, Wolfe warned, the company has a history of "taking one step forward and then one back," so "we believe that some caution remains prudent."
   For the rest of the year, high fuel prices are expected to continue helping the company. Particularly for long-distance hauling, rail is cheaper than trucks: Even though CSX hits its customers with surcharges when fuel prices jump, Ward said the company doesn't recoup all of its costs.
   "They've become, in essence, the cost-efficient competitor for a lot of shipping," said Tim Cebulko, partner at St. Nicholas Private Asset Management in Jacksonville.
   In order to accommodate the growing customer base, CSX has a raft of expansion plans in the works for the rest of the year, which will account for about half of the 500 to 600 workers it plans on bringing on board, with the rest of the new workforce running trains.
   For the quarter, which closed March 31, the company posted net earnings per share of $245 million, or $1.06 per share. Earnings from continuing operations were up $91 million, or 38 cents per share, from the same quarter a year ago, which amounts to a 59 percent increase. Last year's first-quarter earnings also included $425 million, or $1.88 per share, related to the company's sale of its International Terminals business. CSX's stock closed Wednesday at $68.77, up $1.50.

Originally created for the Florida Times Union Monday, April 17, 2006

Landstar, Fidelity dominate list of hometown performers

It's Landstar's seventh year as the area's top performing company, and all three Fidelity spin-offs are in the top ten.

By MARK BASCH, The Times-Union
   Landstar System Inc. keeps on trucking. Landstar System Inc. stays on the road to success. Landstar System Inc. keeps rolling along. It's hard to come up with new cliches to describe the Jacksonville-based trucking company's annual financial performance. In fact, it's downright boring to talk about. Unless you're a shareholder. For you, it's always been good.
   For the seventh year in a row, Landstar finished with the best performance among Jacksonville-based public companies in fiscal 2005, when ranked by their return on average equity. The return on equity, or ROE, is basically a company's earnings divided by the average amount of its capital during the year. Return on equity is a useful yardstick for measuring the performance of public companies, because it shows how much money a business is earning in relation to the money shareholders have invested in it. Landstar's 2005 ROE of 51.54 percent was far above the rest of the pack.
   Landstar's numbers were helped considerably last year by hurricane relief services it provided through a contract with the U.S. Federal Aviation Administration. The company said disaster relief added $31.6 million to its 2005 net income of almost $120 million. But even when you subtract that extra income, Landstar still would have finished in first place with an ROE of 37.96 percent.
   Much of the company's success is related to its unique operating model. "It really does go back to the structure of the company," said Tim Cebulko, managing partner of St. Nicholas Private Asset Management Inc. in Jacksonville.
   Landstar doesn't own trucks itself. It contracts with drivers who own their own trucks to haul cargo around the country. It also uses a network of independent sales agents to arrange for clients' goods to be shipped from one location to another. In a typical load, 75 percent of the fees paid to Landstar go to the driver and eight percent go to the agent, Chief Executive Officer Henry Gerkens explained a year ago. Landstar gets the other 17 percent, and since it doesn't need a lot of capital to operate the business, its profit produces a high return on equity.

From The Florida Times-Union - Originally created Monday, February 27, 2006

CSX stockholders find themselves on the gravy train this quarter

   CSX Corp. shareholders are riding the rails to some pretty nice profits these days, with the stock last week reaching its highest price in almost eight years.
   The Jacksonville-based railroad company rose $4.75 to last week's high of $55.50 in the month since it reported fourth-quarter earnings from continuing operations rose 45 percent to $1.03 a share. Investors have focused not only on CSX's recent performance, but also strong earnings from other major rail firms. The Standard & Poor's 500 Railroad Index, which measures the performance of railroad stocks in the S&P 500, has risen 14 percent since mid-January.
   "It's the movement of the group that's driving CSX," said Tim Cebulko, partner at St. Nicholas Private Asset Management in Jacksonville.
The rail industry is benefiting from competitive advantages over the trucking industry, which has been hurt by high diesel fuel prices and driver shortages. With demand for rail freight service strong, the railroad companies have better pricing power than they've had in a long time, analysts say.
   "The rails haven't seen this for the past 20 years," said Cebulko. 
   CSX's stock is trading at its highest levels since early 1998. Its record high was $62.44 in July 1997.

mark.basch@ jacksonville.com

Originally created Monday, April 3, 2006

Jacksonville-based companies outperform market, indexes say

   Those of you who closely monitor the movements of the Bloomberg Jacksonville stock index (all 12 of you) have probably noticed an interesting trend over the last three years: the index of Jacksonville area companies has done far better than the rest of the market. The index, produced by The Florida Times-Union and Bloomberg News, is comprised of 50 companies based in or with major operations in the Jacksonville area. It has risen by 29 percent a year over the last three years, compared with a 17 percent annual increase in the S&P 500 index and a 14 percent annual gain in the Dow Jones industrial average.
    But you don't have to take our word for it. Jeffrey Helms, managing partner of First Coast Financial Advisors in St. Augustine has come up with his own First Coast Index that shows companies headquartered in Jacksonville do even better than that. His index has jumped 47 percent a year over the last three years. Helms is so impressed with the data that he is sharing it with local economic development agencies, suggesting it can be used as a recruitment tool to lure publicly-traded companies to move their headquarters here (move to Jacksonville -- watch your stock price soar!). "I thought it might be compelling data," he said.
   The Bloomberg Jacksonville index includes companies headquartered in the Jacksonville area but also includes companies that are major employers here, such as Johnson and Johnson and Citigroup Inc. The one drawback to that is while those companies contribute significantly to the local economy by providing jobs, the performance of the Jacksonville units is only a small part of the companies' overall stock performance. Helms' index is purely focused on Jacksonville-based companies. He tracks data from the time a company first went public or when it officially announced it was moving its headquarters to Jacksonville. For example, CSX Corp. and Fidelity National Financial Inc. both moved their headquarters to Jacksonville in 2003, so data on those stocks before 2003 is not included.
   Coincidentally, 2003 was the year that local stocks took off and began to far outpace the major national indexes, whether you look at Helms' data or the Bloomberg Jacksonville index. Fidelity and CSX have both done well in the three-year period but some other local companies really took off, such as Armor Holdings, Florida Rock and Landstar System Inc.
   Of course, it's difficult to attribute the strong stock performance to the Jacksonville headquarters location. Armor has been the top-performer over the last three years because of its contracts to supply armor to U.S. military operations in Iraq. Another kink in the local indexes, compared with other market indicators, is that national stock indexes like the Dow and S&P 500 are designed to be representative of the overall market performance. The Jacksonville stock indexes are not as diversified.
   Tim Cebulko, partner at St. Nicholas Private Asset Management in Jacksonville, notes that the stocks in the Bloomberg Jacksonville index are more concentrated in mid- and small-capitalization companies, which have outperformed large caps in recent years. He also said the index seems to be heavily weighted in cyclical stocks that have been in an up cycle.
   Cebulko also said that despite the recent gains in the Bloomberg Jacksonville index, there is still room for the stocks in the index to grow.
"Most of them are fairly reasonably priced," he said. "The list should continue to do well."
   That would be good news for Helms' clients. Because of the overall performance of Jacksonville stocks, clients have suggested he put together some type of index fund of Jacksonville companies that tracks the performance of his First Coast Index, and he's considering it: "If the economics work, I'd do that for them."

 mark.basch@ jacksonville.com