Five Companies for a Baltimore Portfolio
Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Are Tom Clancy and Edgar Allen Poe your favorite authors? Are "The Star Spangled Banner" and songs from the musical "Hairspray" both in your MP3 playlist? Do you drink Natty Boh with your soft shell crabs? Are your favorite birds Ravens and Orioles? If you answered yes to these questions, you might be from Baltimore.
Individual investors are most successful when they buy into the idea that they are owning a part of a business for the long-term, not short-term trading or speculating on stocks. And a good way to build and maintain that mentality is to buy companies that you can root for through thick and thin. Adding a little civic pride to your portfolio can be a part of that. By owning a few of the local companies that make your community great, you can keep your short-term emotions in check and become an owner for the long haul. And since I'm from Maryland, I'm going to illustrate this with a portfolio of five companies from my state's largest city, Baltimore.
At first glance, Baltimore looks like a city without a clear corporate identity. When Constellation Energy was sold to Chicago-based Exelon last spring, it left Baltimore as the largest city in America without a Fortune 500 company calling the city home. Most of the corporate names on the city's landscape are out-of-towners. The Ravens' football stadium is named after M&T Bank, but despite their huge banking presence in Maryland, they are actually headquartered in Buffalo, NY. The iconic Domino Sugar sign? While the refinery is still operating, the Domino company has been owned by Yonkers, NY based American Sugar Refining since 2001. The famous Bromo-Seltzer Tower over the right field wall at Camden Yards is about all that remains of the Emerson Drug Company, which was sold in 1956 and after many mergers and sales is now part of Pfizer.
In writing this article, I admittedly had to branch out to a few companies that were founded in Baltimore but later moved their headquarters to the suburbs during downtown Baltimore's corporate exodus of the early 1990's. But all five of the companies below are big drivers in the local economy, regardless of where their CEO's suite is currently located.
I think the first company that comes to most people's minds these days as the best-known Baltimore company is Under Armour (NYSE: UA). Founder Kevin Plank hated the cotton T-shirts he had to wear at practice and under his jersey on game days as a member of the University of Maryland football team. After graduating in 1996, he went to work making a better, moisture wicking undershirt for his friends who were still on the team. Today, Plank's company, Under Armour, is fast becoming one of the leaders in athletic apparel, and is worth $6 billion with annual revenues of $1.6 billion. Meanwhile, the company's headquarters are leading the redevelopment and re-invigoration of the Locust Point neighborhood south of the Inner Harbor.
Many of you have probably owned T. Rowe Price (NASDAQ: TROW) mutual funds at some point; they managed my wife's 401(k) plan for years. But aside from owning their mutual funds, you can also own a piece of T. Rowe Price itself. Headquartered right downtown on Pratt Street (where the pedestrian area outside their building is currently getting a make-over), the company is worth $16.3 billion, and brings in $2.8 billion in revenue to the local economy every year.
T. Rowe Price isn't the only big financial name in town. You can find the headquarters of Legg Mason (NYSE: LM) right on the waterfront on the east side of the Inner Harbor, a short walk from Rams Head Live. This asset management and investment company has been part of Baltimore's business community for over 110 years, but most people in Maryland know its name from its sponsorship of the annual professional tennis tournament in Washington, DC (though it recently gave up the sponsorship). Legg Mason briefly sneaked into the Fortune 500 in 2009 (at position #500) but soon fell out of the rankings again. Now they're working on making a comeback with a market cap of $3.36 billion and annual revenues of $2.58 billion.
Charles Bank came to Baltimore from Lithuania in 1866 and opened a tailor shop. His descendants expanded the business and founded a men's clothing manufacturing company that would eventually become known as Jos. A. Bank (NASDAQ: JOSB) in 1945. Under heavy debt, the company moved its headquarters to Hampstead, MD in Carroll County in 1991 to share space with its distribution warehouse in order to save money. But its roots still run deep in the Baltimore community, and it has rebuilt itself into a $1.3 billion company with annual revenues of just over $1 billion from 562 stores in 44 states.
McCormick & Company (NYSE: MKC) started in Baltimore in 1889 making root beer, fruit juices, and other syrups and extracts in a one room shop. Today, a string of acquisitions has turned them into a multi-national giant, and valued at $8.1 billion, they're the leader in the packaged herbs and spices business with almost $4 billion a year in revenue. They moved to Sparks, MD (just north of Hunt Valley) in 1991, even disassembling and relocating the company's English teahouse replica.
While none of these companies makes the Fortune 500, which is ranked by revenues, McCormick, T. Rowe Price, and Legg Mason all enjoy a place in the S&P 500, which ranks companies by market capitalization. At the rate Under Armour is growing, it should someday garner a spot on both lists as well.
Buying and holding stocks for long time periods, ignoring the noise and gyrations of the stock market, is the surest way for the individual investor to get ahead. And just as rooting for the Orioles and Ravens helps keep people engaged and connected to the community, rooting for local companies can help keep investors engaged with their portfolios and give them the fortitude to stick with their convictions and stand by their local businesses even when market conditions get rough.
Gordogato owns shares of Under Armour. The Motley Fool owns shares of Under Armour. Motley Fool newsletter services recommend Exelon, McCormick & Company, and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.