Washington's William G. McGowan, chairman and founder of MCI Communications Corp., reacted calmly yesterday to his paper loss of $14 million in Monday's stock market plunge, which dragged down local companies along with most others across the country.
"I don't consider this part of my net worth and therefore it doesn't affect me," McGowan said of the drop in the value of his stock in MCI, the nation's second-largest long-distance company. "It's exactly like the pot in front of you in the poker game. People who think it's their money are kidding themselves."
Like dozens of other Washington area executives who have invested heavily in the companies they run, McGowan found himself faced with millions of dollars of paper losses after Monday's debacle, although many stocks recouped some of their losses in yesterday's partial recovery.
Between last week and this Monday, McGowan's 4.9 million shares of MCI stock dropped by $2.88 a share. But McGowan said his eye is on a steady, long-term increase in MCI's stock and on the firm's 22 percent increase in third-quarter profits. "We reported out a very good story," he said of the earnings report. "What are you going to do but look on the bright side of it?"
Other executives also viewed the market upheaval as a temporary aberration that they would be able to weather, a position bolstered by yesterday's comeback in the Dow. Still, a few took aggressive actions following the Monday selloff.
Thomas J. Owen, chief executive of Perpetual Savings Bank, said yesterday that the bank would buy back up to 1,375,342 shares its common stock -- 10 percent of the outstanding shares -- after the price dropped from $11 last week to $7.87 yesterday.
As the owner of more than 200,000 shares of that stock, Owen suffered a loss of about $626,000 in Monday's drop. But he said he does not feel poorer, since he had not planned to spend the money now, and he added that he expects the market to improve.
"I think this is an aberration. There is no reason for this. A lot of people panicked," said Owens.
John W. Hechinger, president and chief operating officer of Hechinger Co., the household and building supply company, said yesterday that his family owns more than 12.5 million shares of the company. A drop of $3.50 in Series A stock and a $2.00 in Series B stock on Monday caused a decrease in that investment of more than $25 million.
"Nothing happened insofar as a feeling of confidence in the firm," he said. "There is food, clothing and shelter, and we're in shelter," he said. "When interest rates rise people can't buy homes, and then they'll fix up where they are."
Hechinger said his family's investment was for "the long pull. ... We've gone through these periods before with the market. We'll just ride that out."
Charles O. Rossotti, president and chief executive of American Management Systems Inc., a computer software installer and operator based in Arlington, said the collapse of the stock market was meaningless unless investors were speculators.
"Since I'm not selling my stock, I'm not losing any sleep over it," he said. Rossotti owns 950,000 shares in the company, whose stock fell $4.75 Monday. His paper loss on that date, thus, was more than $4.5 million.
But Rossotti noted that even with Monday's drop, the stock had risen in the last year from $9 a share to $13.25. "Are you sorry it went down 25 percent in the last week or up 50 percent in the last year? It's one thing if you are a speculator. If you're an owner, what's important is the fundamental profitability of the company," he said.
Marriott family members were not available for comment about the drop in value of their holdings in Marriott Corp. And Giant Food Inc. executives -- including Chairman Israel Cohen -- also refused to discuss their investments.
Marriott family members lost more than $247.5 million during the six trading days that ended Monday. The family holds more than 33 million shares, according to CDA Investment Technologies Inc. of Silver Spring, which runs an ownership data base. The value of Israel Cohen's Giant stock also fell several million dollars.
Joe L. Allbritton, chairman and chief executive of Riggs National Corp., also took a beating Monday, losing more than $15 million on about 5 million shares of Riggs stock as its price dropped 3 1/4 points Monday to close of business Monday. But his spokesman, David Palombi, was sanguine. "It doesn't become a loss until you sell," he said.