Investing in Indiana: are Hoosier stocks the way to go?

• Author: McKimmie, Kathy
• Position: Investments

With the stock market decline during the last couple years, should we be looking closer to home for investment opportunities? Well, it all depends, say the Indiana experts.

Heard of the Indiana Index, tracking the performance of 90 Indiana public companies against the Dow? It's reported each week on the television show Inside INdiana Business with Gerry Dick. Overall, since the start of 2000 Indiana stocks have fared better compared to the Dow-- through the week before Thanksgiving this year, the Indiana Index was up 13.3 percent. During the same period the Dow was off 23.4 percent, the S&P 500 was down 36.7 percent and the Nasdaq Composite had fallen 63.9 percent.

Don't read too much into that, though, says index creator Mark Patton, president of Patton Investment Management in Indianapolis. The comparison is only used on the TV show, and he hasn't analyzed exactly why Indiana has fared better. But one explanation is Indiana's relative lack of tech stocks. When they sagged nationally, Indiana wasn't impacted as much, he says, but the tech stocks that Indiana does have--such as like Interactive Intelligence, Made2 Manage and CTS--"have experienced the same trends as the overall tech environment, a lot of fallout."

There's an old adage: buy what you know--and you're more likely to know about Indiana companies. But ultimately, geography may be less important than industry performance in your decision-making.

LET'S GET SPECIFIC

Patton thinks some well-known Indiana stocks stand out in the crowd. Biomet is a great example, he says, with consistent and stable growth, and "there's a big case that can be made around Eli Lilly." The loss of the Prozac patent hurt, but "if the pipeline is as strong as they say," it should be a good buy since its price has been nearly cut in half. "Buy when other people are selling."

Anthem, a public company for just over a year, is doing very well, says Patton, "nothing abnormal to the industry. It's an Indiana company people understand."

Tim Robinson, senior vice president for investments and insurance with Irwin Union Securities, shares Patton's opinion about Anthem. "Generally, the health-care industry is going to do well because of the aging Boomer generation." Plus, you have the benefit of a tight insurance-industry market, he says, meaning higher premiums and higher profits.

Gene Tanner, vice chairman of NatCity Investments, says county-seat town banks--as he calls them--have done quite well, including First...