The chairman of a Baltimore-based real estate development and construction materials supply company has tightened his family's control over the firm following purchases of more than 25 percent of the company's stock by several outside investors.

Arundel Corp.'s chairman, Henry J. Knott, boosted his stake in the firm to 519,775 shares, or 25.32 percent of the company's stock, between Oct. 10 and Oct. 30. The Knott family and other company insiders now own about 45 percent of Arundel. Knott's son, Francis X. Knott, is Arundel's president.

Knott's purchase came after three separate investor groups increased their stakes in the firm to what amounts to about 27 percent of Arundel's nearly 2.1 million shares.

First, about a month ago, Phoenix Management Corp., a privately held investment firm based in Cockeysville, Md., increased its stake in Arundel to 15 percent. Arundel officials said then they believed that Phoenix intended to seek control of the company. The firm had been building its stake in Arundel for several months, according to reports filed with the Securities and Exchange Commission.

Next, two West Coast investment firms reported in November that they had purchased about 12.9 percent of Arundel's stock.

St. Francis Investment Co., a San Francisco firm that provides management and professional services to a group of businesses, trusts and individuals, said it made the purchase for investment purposes only.

But the second company, Pilara Associates, a small investment management firm based in Lafayette, Calif., intends "to continue to explore, evaluate and support any moves to improve the return on their client's investment in Arundel by any appropriate means," according to company official Andy Pilara. The options include selling off company assets, a change in Arundel's management or a merger, Pilara added.

Why the sudden interest in Arundel?

"Arundel's asset values appear to be higher than what appears on the books," said George F. Shipp, an analyst with Investment Corp. of Norfolk. The book value of Arundel's stock as of Sept. 30 was $15.61, according to a filing with the SEC.

Arundel's real estate is a "hidden asset on its books," Shipp explained. It is worth substantially more than the value at which the company carries it on its balance sheet, he said. Companies frequently carry real estate on their books at the purchase price, which may be significantly less than the current market value of the properties, especially if they have owned the land for several years.

Arundel's annual revenue is $60 million, and its profits have been erratic. During the four quarters ended Sept. 30, Arundel earned 80 cents a share, compared with $2.12 for the previous year. Arundel's stock, traded on the American Stock Exchange, closed Friday at $18.75 a share.

"Clearly, Phoenix Management and the West Coast groups see more value in Arundel's mineral assets and real estate parcels than the stock price reflects," Shipp said. "They may want to realize that value through reorganization or sale of those assets.

"Arundel's management has been a little slower in achieving those kinds of goals," Shipp added. "These two groups are hoping to provide a catalyst for the value of Arundel's assets to be realized by all stockholders. Arundel has a well-located and valuable quarry area with efficient surrounding properties and low-cost methods of transportation.

"Arundel's real estate hasn't been sold as quickly as outside investors would have liked," Shipp said. "Earnings haven't been as strong as if the real estate had been sold and some of the cash re-deployed in the construction materials business over a long-term period."

Arundel officials could not be reached for comment.

Half of Arundel's 4,000 acres of land, located primarily in Maryland, are up for development or sale. The rest of Arundel's real estate is in Virginia, New York, New Jersey, Georgia and Alabama. The company also may be attractive to investors because it has $6 million in tax-loss carry-forwards and another $2.2 million in investment tax credits.

Eugene G. Bowles Jr., president of Tidewater Holding Co. of Richmond, recently sold 140,000 Arundel shares -- 7.1 percent of the company -- in "a private sale to an undisclosed buyer." The buyer was Arundel's chairman, Knott, Bowles said in an interview.

Arundel purchased Tidewater, Bowles' constuction materials and contracting businesses, last year. Bowles received Arundel stock and served on the company's board. Arundel later sold Tidewater's contracting operations, retaining its stone-quarrying and ready-mixed concrete businesses. When Bowles sold his entire share to Knott, he also resigned from Arundel's board.