CEOs play stock-defense

CEOs play stock-defense

STOCKS by Jean Gruss | Editor/Lee-Collier

A company's stock price does not always reflect the company's value or earnings, as some Gulf Coast CEOs have learned too well.

Four chief executives who gathered in Fort Myers recently had reason to lament the declines in their companies' stock prices.

The CEOs of Alico, Bank of Florida, Chico's' FAS and Health Management Associates collectively have seen their stocks fall 44% in the last 12 months, according to Thomson Financial. The CFA Society of Naples, an organization of money managers, convened the CEOs at Florida Gulf Coast University for its inaugural investors' forum.

"They don't understand," says Alico Chairman John Alexander, whose agriculture company has been unfairly lumped into the downtrodden real estate industry, he says.

Florida community banks are being treated like "financial asbestos" by investors, complained Bank of Florida CEO Michael McMullen.

Chico's CEO Scott Edmonds concedes his company's stock price as a multiple of earnings has been "crushed."

Health Management CEO Burke Whitman said the rising ranks of the uninsured have swamped his hospital company, dragging down earnings and the company's stock.

For CEOs, defending a company's stock price can be a tricky proposition. On the one hand, a company leader must act as a sort of cheerleader-in-chief while being careful to paint an accurate picture of business prospects.

Consider Edmonds, whose Chico's stock is trading near its 52-week lows because of sales declines. "I think currently we're fairly priced until we can post some earnings."

But McMullen of Bank of Florida says investors are unduly pessimistic about the state's community banks. "The markets in Florida are not toxic," he insists. "Florida is not a Third World country." Pockets of problem loans, particularly in Lee County, will be resolved over time, he says.

At Alico, Alexander says the company has diversified into a wide variety of agricultural products, including vegetables. Because it has sold land to developers near urban areas, investors consider Alico a real estate company rather than an agriculture company.

One-time charges also have depressed Alico's stock price. Despite its best year of operating profits in 2007, the company recently settled a $66-million dispute with the Internal Revenue Service.

Alexander complains that investors value Alico by dividing the company's market capitalization by the number of acres it owns. Alico's current stock price values the company's land at $2,000 an acre. "We wouldn't sell the first acre for that," he says.

At Health Management, Whitman says 50 million Americans have no health insurance, burdening hospital companies like his. "It's the socially responsible thing to do to give Americans access to health care," Whitman says.

BY THE NUMBERS

Downtrodden stocks

Recent 52-WEEK

Company Symbol price high low

Alico ALCO $42 $65 $35

Bank of Florida BOFL $9 $20 $9

Chico's FAS CHS $7 $28 $7

Health Management Assoc. HMA $5 $12 $5

Source: Google Finance