Investing in Indiana: which homegrown companies do state stock pickers like?

Author:Beck, Bill

ONE OF THE MORE intriguing issues in the recent Indiana gubernatorial election involved the question of which candidate would do more to ensure that state jobs would remain in the Hoosier state. Outsourcing turned out to be one of the sleeper issues of the 2004 election, which got us wondering what the state's investment professionals thought about stay-at-home investing.

Turns out that wealth managers, investment advisors and stock-market makers from around the state aren't at all averse to loading their portfolios with homegrown companies. We talked to professionals from one end of the Hoosier state to the other, and they all told us much the same thing: Investors could do far worse than include solid Indiana companies in their investment portfolio.

"These are long-term companies," says David Forbes, senior vice president at Muncie-based Merchants Trust Co. "They're not flashy, and they're not sexy. They tend to be what you find in the Midwest. They just make money."

Merchants Trust, the trust affiliate of First Merchants Corp., has 70 employees managing $1.5 billion in assets. The company has offices throughout central Indiana, including Muncie, Lafayette, Richmond and Indianapolis, as well as Columbus, Ohio.

Forbes says his portfolio managers have several Indiana companies on their radar screens right now. Topping the list is Indianapolis-based Eli Lilly & Co. "If you're in that industry sector," Forbes says, "you need to have a number of pharmaceutical and medical-equipment companies. And we would want Lilly in that portfolio. It's not a one-buy stock. You've got to have six or eight companies in the portfolio and spread the risk out against the sector. Lilly is always on our list."

A second Hoosier stock that the Merchants Trust portfolio managers particularly like is Evansville-based Vectren Corp. "It's often overlooked," Forbes says of the utility stock that was formed out of the merger of Southern Indiana Gas & Electric Co. and Indianapolis-based Indiana Gas Co. "It's not a huge utility, but its markets are stable and growing. It has no nuclear exposure. It makes money and pays dividends. It's your basic widows and orphans stock."

Matthew Finn, senior vice president and director of portfolio management at Signal Capital Management in Evansville, echoes Forbes in being a big fan of Vectren. Vectren is one of the stocks we have in our portfolios," Finn says. "It's a hometown player and a good solid company. They have a very...

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