To Find Top Performers, Get Back to Basics

It returned an average of 47 percent a year over the past decade, but Gaithersburg-based MedImmune's stock has risen and fallen recently with news on FluMist, its struggling nasal spray influenza vaccine.
It returned an average of 47 percent a year over the past decade, but Gaithersburg-based MedImmune's stock has risen and fallen recently with news on FluMist, its struggling nasal spray influenza vaccine. (Medimmune Inc. Via Bloomberg News)

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By Jerry Knight
Monday, April 25, 2005

As chief executive of NVR Inc., the Washington area's biggest home builder, Dwight C. Schar gets a lot of grief.

He makes headlines by buying a $70 million vacation compound in Palm Beach, Fla.

He makes land deals with a relative and an NVR board member that result in NVR paying his pals millions of dollars.

He makes hundreds of millions of dollars by selling NVR shares, after the company buys back shares, keeping the price of the stock up.

And he makes absolutely no effort to cultivate investors or the media, declining interviews, dispensing even with the standard quarterly conference call to discuss financial performance.

But Schar sure does make money for NVR's stockholders.

Over the past decade, NVR was the best-performing stock in the District, Maryland and Virginia. It climbed from $5.50 a share to $769.40 -- an astonishing gain of 13,889 percent. From the last trading day of 1994 through the end of last year, NVR stock went up 64 percent per year .

Over the past five years, the McLean company was outperformed in the Washington area only by Jos. A. Bank Clothiers Inc., the ever-expanding Maryland menswear chain. Between Dec. 31, 1999, and Dec. 31, 2004, Bank shares climbed from $1.60 to $28.30 -- a five-year return of 1,669 percent, which translates to 77.5 percent a year. Over the same time, NVR shares gained 1,511 percent -- 74 percent per year.

A 10-year review of the long-term performance of local stocks proves to be disappointing for apostles of the idea that the Washington region has been transformed into a high-tech hot spot. Most of the region's top-performing stocks are companies that weren't obvious front-runners a decade ago.

As it turned out, Internet stocks didn't pay off in the long run. Telecommunications companies came and went. Biotech barely made a blip on the chart of Washington's best long-term investments. High tech may have created lots of local jobs, but it hasn't created much long-term shareholder value.

Washington investors made more money on companies that make things -- houses, drugs, kitchen cabinets, car stereos and loans. Investments in investment firms also paid off. Government contractors demonstrated that year in and year out, the most reliable way to make money in Washington is working for Uncle Sam.

Four government contractors made the Top 20 Stocks of the Decade list -- Analex Corp., an Alexandria specialist in top-secret national security work; Argon ST Inc. of Fairfax, a provider of communications and electronics services to defense and intelligence agencies; CACI International Inc. of Arlington, a major government computer contractor; and Duratek Inc. of Columbia, which specializes in work on nuclear power plants.


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© 2005 The Washington Post Company

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