The "buy local" trend is a noble and popular concept. But that approach would have left South Carolina stock pickers in the red last year.
The value of a $10,000 investment spread evenly across the biggest publicly traded companies headquartered in the state last January would have fallen by almost 13 percent to about $8,700 when the closing bell rang Dec. 31.
By contrast, major U.S. stock indexes notched annual gains of between 4 percent and 13 percent. North Carolina's 50 largest public businesses returned 15 percent, not including dividends, according to a report in the Charlotte Observer.
The comparisons are hardly fair. The fictional "Palmetto State Index" is a tiny and relatively undiversified yardstick. It's made up of just 22 businesses, many of them small. To be included, a company had to list its shares for the entire year on a major exchange, namely the Nasdaq and the Big Board.
In 2013, the entire South Carolina group had a remarkable run and ended that year up by 39 percent before dividends. It wouldn't repeat that feat in 2014, when nine of the companies lost altitude, pulling the rest of the bunch down with them.
The two biggest losers were the two top gainers in 2013. Rock Hill's 3D Systems, a maker of three-dimensional printing machines, plummeted more than 65 percent last year amid an industrywide slowdown. Not too far behind it was Regional Management. Shares of the Upstate-based consumer finance firm tumbled 53 percent.
On the plus side, Denny's Corp., home of the famous Grand Slam Breakfast, knocked it out of the park last year among its in-state peers. The Spartanburg-based restaurant operator sizzled, cooking up a 44 percent increase in its stock price.
Shareholders in South Carolina's largest publicly traded company also did exceptionally well. Cayce-based SCANA Corp. climbed by 28 percent to $60.40, reflecting the red-hot demand for dividend-rich utility stocks last year from income-seeking investors.
Four of the 22 companies in the faux index are headquartered in the Charleston region, though that is likely to grow by one this year because Carolina Financial Corp., which listed its stock in July on the Nasdaq, will be eligible for inclusion.
Leading the pack locally in 2014 was Southcoast Financial Corp., the Mount Pleasant-based owner of Southcoast Community Bank. The small Nasdaq issue increased by almost 22 percent to $7.05.
Among the others, Daniel Island software firm Blackbaud Inc. added 16 percent to its share price, to $43.26, while a neighboring technology issue, Benefitfocus Inc., skidded 43 percent to $32.84. The Bank of South Carolina Corp.'s stock also ceded some ground, ending the year 6 percent lower at $14.79.
If there's an investment lesson in this stock market microcosm it's this: Diversification is key.
Contact John McDermott at 937-5572.