Bond

PLAGUED BYPLUNGING INTEREST rates? Baffled by an overvalued stock market? Join the crowd of nervous investors who have become increasingly choosy over the past year about where they park their funds. The result: a "stock-picker's" market, in which investors rely heavily on advice fromthe pros.

Well, it's time to turnback the clock. Twice each year, BLACK ENTERPRISE convenes its investment Roundtable, a gathering of six professional investors who project where they think the markets, and individual stocks, are headed. How'd they do? Seeing how average stock prices barely changed in the yearsince BE's October 1992 roundtable (held in mid-June),our experts' foresight proved truly impressive.

For the 12-month period beginning June 15, 1992, a market basket of one dozen stocks (two choices each from oursix panelists) has risen 18.55% - more than double the gain in the S&P 500 stock index, at 8.73%. To boot, five of the stocks are now fetching prices that are 32% to 128% higher than a year ago. Of course, some stocks were losers- one took a painful 50% beating. (See "Hits" and "Misses.") Keep inmind, though, stock investing is a long-term proposition. Thus, a year in the life of any stock is no true barometer of its five- or 10-year potential.Still, the 12-month ups and downs of our experts' picks says quite a lot about what's happening in stock investing today. Here's the final scorecard (our calculations take into account the net aggregate increase for eachstock pair).

JOHN W. ROGERS Jr.: Up 5.90%

From Jurassic Park's T. Rex and Barneyon PBS, it seems that Hasbro Inc. has packaged everybody's favorite dinosaurs. Smart move. These popular creatures, re-hatched by Hasbro as huggable playthings, have helped make the world's largest toy manufacturer a stock-market winner in 1993. Over the past year, Hasbro shares surged 32%, from to .

Last October, John W. Rogers Jr., president of Chicago-basedAriel Capital Management Inc., couldn't have foreseen dinomania. Yet he knew that the Pawtucket, R.I.-basedHasbro was well-positioned to end up in the stock market winner's circle. "They've done a very good job of diversifying their business," explains Rogers,adding that, "they're not dependent on one hot toy." Indeed, Hasbro owns a whole stable of valuable brand names, including Milton Bradley and the Cabbage Patch Kids.

When he selected the stock a yearago, Rogers, who manages .1 billion for public and private pension and mutual funds, figured Hasbro would shine in part because Wall Street was still down on the company'sdisappointing earnings. A value-oriented investor, Rogers was willing to look beyond that temporary setback and see the company's real worth. Ironically, poor earnings were exactly what clobbered Rogers' other pick - Jostens Inc.Known mainly as the maker of class rings, yearbooks and otherproducts for the educational market Jostens had in 1989 launched integrated learning system computer software for schools - an innovation which now accounts for 25% of the company's business. With widespread anticipation that the U.S. economy would begin to revive after the recession, Rogers predicted burgeoning sales of the software.

It didn't happen. Not only has the economylimped along ever since, but lean public school budgets haven't been supporting the products. In fact,shares of the Minneapolis-based Jostens sank 23% over the past year to . But Rogers likes to buy stocks on weakness, with an eye to capitalizing on their rebound, so he's an even bigger fan of the company today.

ALAN B. BOND: Up 10.4%

When Alan B. Bond bought a Nordic Track fitness machine three years ago, he liked the product so much he boughtthe company. Well, actually, Bond, the president and chief investment officer of Manhattan's Bond, Procope Capital Management, picked up shares in CML Group Inc., thecompany that manufactures Nordic Track. CML, which also owns the Nature Company chain of retail stores, was one of Bond's picksfor the BE roundtable. As for its performance? It was a muscle-bound success,spiking 70%, from to .

"It's always good to have experience with the product," says Bond. Millions of health-crazed Americans like Bond have helped make Nordic Track one of the hottest-selling fitness machines. Even cheaper clones couldn't knock this CML product offbalance. Not surprisingly, Acton, Mass.-based CML hopes to repeat its U.S. success in Europe.

Unfortunately, Bond's other pick, Kirkland, Wash.-based Costco Wholesale Corp., was a market dud. The chain of warehouse clubs dropped 39% (from to .50) since it got Bond's nod. A value-oriented investor, Bond,whose firm manages over million for institutional clients, was drawn to Costco because the company seemed durable and underpriced in avery competitive industry. Costco has survived, all right, but in 1993 the buy-in-bulk retail industry has sagged further. Even high-flying Wal-Mart operator of the Sam's Club warehouse chain, hastaken a beating.

Earlier this year, Costco struck a deal to acquire one of its competitors, the Price Club Chain. Bond says he still likes Costco, even more now that it'scheaper. "We were early in anticipating the consolidation. I think the new companywhich will emerge in 1994 will be a dominant player in the industry."

LOUIS A. HOLLAND: Up 40%

Louis Holland called it an "educated kind of luck" that saw one of his favorite picks last year, American International Group (AIG), surge 48% (from to ) over the past year.

The New York-based insurance giant, like other property/casualty companies, had beenin the investment doghouse for the past three years. Burdened with high fixed costs and suffering from unremitting price wars with its rivals,AIG was a gutsy call. But it fit the profile that Holland likes. "We seek out companies that are growing faster than themarket," says Holland, managing partner and chief investment officer of Chicago-based Holland Capital Management The firm has million under management mostly from small institutions, governments and wealthy families. "Also,AIG is one of America's best-managed companies."

Perversely, it hasn't hurt that in the year since our roundtable the world hasbeen beset by catastrophe, from Hurricane Andrew to tragic oil-tanker accidents. The huge losses suffered by the property/casualty industry are so extreme, investors believe insurers will have to raise premiums. That may notbode well for policyholders, but it probably means higher prices for the industry's stocks.

On the other hand,Chicago's Sare Lee Corp., Holland's second pick in 1992, can't expect a big rise in earnings growth. The maker of bakedgoods and other foods doesn't suffer much during hard times, nor does it fatten when times get better. SaraLee's shares haven't been so sweet; they were down by 3.8% exactly 12 months after Holland made his choices.

BARBARA LANDERS BOWLES: Up 31.40%

Oddly enough, the Jurassic Park phenomenon figured strongly in thescorecard of Barbara Landers Bowles, founder and president of Chicago's Kenwood Group Inc.

Bowles, whose firm manages million, washigh last year on Autodesk Inc., a software developer that dominates the market for computer-aided design, or CAD. Autodesk's shares shot up 44% in the 12 months since sherecommended the stock. "The company's technology is used in movies like Jurassic Park, as well as in industrial design and architecture," she explains.

Ayear ago, Sausalito, Calif.-based Autodesk had stumbled and the stock price was low at , Bowles felt. Although the company has 72%of the CAD market, its strength was in the high end, where its software ran on expensive workstations rather than on low-end PCs. Corporations, however, were shifting toward PCs, and the workstation market was beginning tosuffer.

Fortunately, Autodesk has since leaped into the market for PC software. -We felt its problems might be solved, and theywere", says Bowles.

The dominant manufacturer of workstations, Boston-based Sun Microsystems, was Bowles other pick, and it has risen amodest 13%. One reason it didn't do better is that such rivals as Hewlett-Packard and Silicon Graphics are producing better workstations - and charging more for them. (In fact, Silicon's technology performed the animation magic that gave life to Jurassic Parks dinosaurs.) In addition,Sun's low-end workstations are running neck and neck with ever-more sophisticated PCs.

Although Bowles' picks climbed a combined 31.4% in thelast year, she's cool to both of them. Sun's competitive problems are getting worse, and she considers Autodesk to be just "fairly" priced.

MACEOK. SLOAN: Down 28.7%

With an investment horizon of five to10 years, Maceo K. Sloan, president and chief executive officer of NCM Capital Management in Durham, N.C., invests for the future. So eventually his 1992 picks may pay off, but over the past year they have not.