Top Tar Heel stocks of the '90s.

• Author: Davis, Lisa
• Position: North Carolina - Includes related article on Oak Value Capital Management Inc.

David R. Carr Jr. figures that among them Oak Value Capital Management's five portfolio managers have visited almost every large public company in North Carolina. They've sat down with management, poked around the plants and chatted with employees. It's a good way to get a handle on a business, Carr says, but you have to be careful. "Companies will almost always tell you things are going to be good," he says. "None of us have ever been to a company where they've said, 'This is really a bad time. Things are terrible.' So our job as investment people is to try and separate all that good optimism from reality."

For an investor, there's nothing more real than the return on a company's stock. That's why Carr, president and co-founder of the Durham-based investment management firm, took interest in BUSINESS NORTH CAROLINA's ranking of the best Tar Heel investments of the '90s. "This list certainly helps us reflect on where we've done our job properly in separating optimism from reality," Carr says.

Oak Value Vice President James J. Green compiled the list. He took BNC's Top 75 public companies based on market value [June 1994] and computed five-year total return, assuming dividend reinvestment, for each. He also figured the one-, three- and five-year compounded annual return. Top 75 companies that had not been public five years were ranked on three- or one-year total return.

Companies that had been public less than a year at the ranking's cutoff date, Sept. 30, 1994, were excluded - among them, Highwoods Properties, Martin Marietta Materials, SkyBox International and Summit Properties. Also excluded were companies that did not make the Top 75 - such as Alba-Waldensian (five-year total return of 41%), Reeds Jewelers (57%), Communication Cable (78%) and Rauch Industries (83%).

What's left, however, is an impressive list. Twenty-six of 51 stocks posted five-year total returns greater than that of the Dow Jones Industrial Average. Only seven were negative. Reflecting the market's tough year, the one-year returns weren't as impressive. Only five of 15 companies on that list exceeded the Dow Jones Industrial Average, and eight had negative returns.

Still, North Carolina companies are a strong bunch, Carr says. "You've got a growing economy in the South, a good tax base. New companies locating here often may be stronger than in other parts of the country because they are not buying into problems - old-line high-tax areas or areas with bad infrastructure...