July 1, 2008 2:59 PM
Hot and cold stocks? How we make the list
It's worth taking a few paragraphs to talk about our quarterly stock report in today's paper, and how it differs from the one in the Denver Post, if you're one of the rare readers who reviews both.
Why now? After all, the two papers' different approaches yield slightly different results every quarter.
Today's Post, however, highlights the well-known Frontier Airlines as the worst-performing Colorado stock of the quarter. It is absent from our report.
That's because Frontier flunked one of our qualifying criteria - a stock must be traded on a major exchange to be included. The airline, which declared bankruptcy in April, was soon booted from the Nasdaq.
Let me fully review our criteria for our quarterly stocks report. It's also the criteria for the Bloomberg Colorado Index, which we run.
* Companies must have a Colorado headquarters. The primary determinant is the "principal executive office" listed in a company's filings with the Securities and Exchange Commission.
* Companies must be listed on a major U.S. exchange. NYSE, AMEX, Nasdaq. Not OTC Bulletin Board or Pink Sheets.
* Companies must have a minimum market capitalization of $10 million or more. (A remarkably low threshold in today's global market, but one that some companies fail to meet).
To get really picky, we just tweaked a rule and let in International Royalty, a Colorado-headquartered company that's incorporated in Canada and files "foreign issuer" reports with the SEC. In the past, we required companies to make the standard domestic filings like 10-Ks and 10-Qs, but we've decided to allow these types of companies if they meet the other criteria.
We don't change our list, or the Bloomberg Colorado, every single day. We make changes as the quarter end approaches, adding and dropping companies from our list and from the Bloomberg Index.
(For those of you with index expertise, this means, yes, our stock report and the index are upward-biased, as companies like Frontier that plummet into bankruptcy get removed as soaring IPOs are added.)
For our quarterly stock report, we classify companies by market capitalization: $250 million and above, or below $250 million. It doesn't divide the companies in half, perfectly, but it's generally kept no more than 55 percent of the field in the "larger company" category.
We made this decision in 2003, after we saw our second-quarter results. USURF America, an obscure Colorado Springs telecom company with no revenue but a brand-new AMEX listing, came in No. 1 by zooming from 5 cents a share to 20 cents, a 300 percent gain.
That made it worth nearly $16 million, but we had a feeling the company wasn't the right long-term play to highlight as the Colorado quarterly stock champion. Today, it's called Cardinal Communications, it sells for three-tenths of one cent per share, and we'd give you a market cap figure if the company had released any shares outstanding totals since March 2006, which it hasn't.
So today, when we focus on best and worst performers, we're looking primarily at the bigger names in Colorado. And that helps explain why we said Crocs was the worst performer of the quarter, when the Post listed Frontier worst, then Good Times Restaurants as the No. 2 worst-performer.
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