L.A. County’s publicly traded companies have had a tough time as of late, thanks in large part to the travails last year of Burbank-based entertainment giant Walt Disney Co.
As of March 31, the 50 largest public companies in Los Angeles County posted a combined $700 billion in market capitalization, down $25 billion, or a 3.5% drop, from March 31 of last year, according to the Business Journal’s annual list of the largest public companies in – or immediately adjacent to – Los Angeles County. The list was compiled from data supplied by Yahoo Finance.
By comparison, the Standard & Poor’s 500 stock index rose nearly 7% in the 12 months ending March 31.
The entire drop in the LABJ 50 – and then some – was due to Disney, which lost a whopping $46 billion in market cap between those two dates. Removing Disney from the calculation resulted in the remaining 49 companies posting a market cap gain of more than $20 billion, or up 4.1%.
Small-ish cap tilt
The universe of L.A.’s public companies has long been dominated by a mix of small and mid-cap players. Small-cap stocks are defined as having market caps less than $2 billion, while mid-cap have market caps between $2 billion and $10 billion.
A major factor behind this trend has been the departure over the decades of Fortune 500 public companies, including Hilton Hotels Corp., Northrop Grumman Corp., and Occidental Petroleum Corp. As these large cap companies have left or been acquired, smaller cap companies have taken their place.
This year’s list is no different with 16 small-cap companies and 22 mid-caps. Only 13 companies qualify as large cap, with only two of those – Disney and Thousand Oaks-based Amgen Inc. – in 12-figure market cap territory.
Small cap stocks have generally underperformed their large cap peers over the past 18 months, said Sahak Manuelian, managing director of global equity, healthcare, sales and trading for Pasadena-based Wedbush Securities. He noted that the Russell 2000 index of small cap companies fell 5% over the 12 months ending in March.
“This can be attributed to more macro concerns, (including) interest rates and sentiment,” he said.
But he pointed out that most of the large cap stocks on the Business Journal list did much worse than their counterparts on the broader markets.
“Disney (stock) was awful” during that time period, as were Rosemead-based Edison International, Long Beach-based managed care provider Molina Healthcare Inc. and Pasadena-based Alexandria Real Estate Equities Inc., a health care-oriented real estate investment trust, Manuelian said. “It was not an easy place for L.A.’s finest.”
Disney: Tepid performance until very recently
Because of its huge market cap, media and entertainment giant Disney has long been the key player in the universe of L.A. County public companies. This year, the company dragged the entire cumulative market cap down.
A major factor behind Disney’s stock price fall during the 12 months ending in March was the performance of its broadcast and cable properties such as ABC, Disney Channel and Arts & Entertainment, said entertainment industry analyst Laura Martin with New York-based Needham & Co.
“Disney had slowing subscriber growth across all its media lines, especially with linear TV,” Martin said.
But both Martin and Manuelian said Disney’s fortunes with investors have improved since March, thanks to positive earnings news in May. The stock closed on July 16 at $119.82 per share, up more than 20% from the close of $98.70 on March 31 and only about $1 shy of the level on March 31, 2024.
Rocket Lab market cap into stratosphere
On the other end, there’s Rocket Lab Corp., the Long Beach-based rocket launch company whose stock soared 309% between March 31 of last year and March 31 of this year. That was by far the biggest percentage gain among the 50 companies on the list.
And the gains have continued since March 31, with the stock nearly tripling to close at $47.69 a share on July 16 – more than 11 times the $4.08 per share level on March 31 of last year.
Rocket Lab has had a string of successful launches, which in turn has led to more contracts, including with the Department of Defense. In December, the company achieved the very difficult milestone of two launches within 24 hours from different hemispheres, which Chief Executive Sir Peter Beck called “an unprecedented capability” in the small launch market.
Live Nation, Tutor Perini among other big gainers
Beverly Hills-based ticketing and live events company Live Nation Entertainment Inc. and Sylmar-based civil construction contractor Tutor Perini Corp. both saw their stock price climb about 62% between March 31 of last year and the same date this year.
Live Nation has benefitted from millions of people flocking back to live concerts after a nearly three-year hiatus due to the Covid-19 pandemic.
Tutor Perini investors, meanwhile, have been impressed with the company’s string of seven contracts exceeding $1 billion it has won over the past 18 months. These include a $3.76 billion contract to build a new jail in Manhattan, a $1.2 billion contract to build a pair of tunnels under Manhattan and a $1.7 billion rail project in Honolulu.
Health care industry woes
Health care stocks on the Business Journal list in general fared poorly. Two of the biggest percentage losers in market cap were stocks of pharmaceutical companies: Xencor Inc. and Arrowhead Pharmaceuticals Corp., both of Pasadena.
“Small cap biotech stocks have been just awful,” Manuelian said. “A lack of (merger and acquisition) deals, higher interest rates for longer, and political uncertainty with the new administration,” have all contributed, he said.
Health insurance giant Molina also saw its stock plunge after the November election because of uncertainty over the size and scope of cuts to Medicaid. Roughly 80% of patients covered by Molina are on Medicaid. As a result, Molina lost more than $6 billion in market cap between March 31 of last year and the same date this year.
About the only bright light on the health care front was Thousand Oaks-based pharma giant Amgen Inc. Just before this 12-month stretch, Amgen completed its purchase of Horizon Therapeutics, giving Amgen a way into the drug market for rare diseases.
As a result, Amgen gained $15.1 billion in market cap between March 31 of last year and the same date this year, the largest gain on the Business Journal’s list. That pushed the company’s market cap to more than $167 billion, a relatively close second behind Disney.
