The meltdown on Wall Street didn't derail the Buffalo Niagara region's stocks during a nerve-wracking third quarter.
While the financial crisis that swept through Wall Street last month took a toll on the stocks of companies based in the Buffalo Portfolio, the impact generally wasn't quite as severe as on the larger market.
As a result, a portfolio that owned a single share of each of the Buffalo Niagara region's stocks would have inched up by 1.3 percent during the third quarter, thanks to big gains in July and August mitigating September's decline.
That 1.3 percent gain looks good compared with the 4.4 percent drop in the Dow Jones industrial average and even better against the nearly 9 percent declines by the Standard & Poor's 500 index and the Nasdaq Composite index.
One reason for the Buffalo Portfolio's resilience is the strength of the region's bank stocks. During a quarter when the nation's financial system came under intense pressure and several major banks were either taken over or pressured into mergers because of their shaky finances, the local bank stocks enjoyed a banner quarter.
"They weren't the banks people were focusing on," said Christopher Carosa, who runs the Bullfinch Funds' Greater Western New York Series mutual fund.
Three of the four local bank stocks gained more than 22 percent during the summer quarter, led by M&T Bank's nearly 27 percent jump, while the weakest of the quartet, Evans Bancorp, turned in a nifty 11 percent gain.
"It speaks to the strength of upstate," said John Koelmel, the president and chief executive officer of First Niagara Financial Group, whose shares jumped by almost 23 percent during the quarter.
"It's a pretty stable and solid banking environment, and that's a function of the underlying economy," he said. "There isn't a sense of gloom and doom here."
Overall, it tended to be a quarter of extremes for the Buffalo Portfolio. The gainers were roughly in line with the losers, with 12 stocks rising during the quarter and 10 falling.
But the price changes, for the most part, were quite wide, with East Aurora aircraft lighting and electronics equipment maker Astronics Corp. leading the way with a 64 percent surge, while Elma motion control equipment manufacturer Servotronics took the biggest hit as its stock lost half its value.
In all, half the local stocks rose by at least 11 percent during the quarter, while a quarter of them tumbled by nearly 20 percent or more.
No stock weathered the Wall Street meltdown better than Astronics, whose battered stock soared after the company's second-quarter profits rose by by 13 percent, nearly double analysts' estimates.
Those surprisingly strong earnings helped reverse a terrible start to 2008 for Astronics, which had given up all of the gains it reaped last year when it was one of the region's highest fliers. Even with that summer surge, Astronics shares still finished the quarter down 46 percent for the year.
It was a similar story at Greatbatch Inc., the Clarence-based medical battery and component maker whose shares rebounded from a first-half slump to jump by 42 percent in the third quarter.
Like Astronics, Greatbatch's profits rebounded sharply during the second quarter, easily topping analysts' forecasts, as sales shot up by 81 percent because of a string of acquisitions the company made over the last year.
Strong profits also were the driving force behind Computer Task Group's stock, which shot up by 27 percent to its highest levels in nearly seven years during the summer.
CTG's second-quarter profits more than doubled and the Buffalo-based information technology company raised its 2008 earnings estimates for the second time this year as higher demand for computer solutions work, particularly from the health care industry, spurred double-digit sales growth.
Those gains narrowly edged out the jump in M&T's stock and the almost 25 percent rise in the shares of Financial Institutions, the Warsaw-based company that runs Five Star Bank.
Stronger profits couldn't stop the steep slide in shares of Servotronics, which had been one of the shining stars among the local stocks since the end of 2005.
Servotronics shares began to decline in the second quarter and that accelerated over the summer after sales at its consumer products segment dropped by 37 percent and the company warned that its knife business could see "volatile deliveries" stretching into next year.
"It's a thinly traded stock," Carosa said. "If there's any sort of bad news and people are bailing, that's going to be exaggerated in the stock price."
Orchard Park anesthesia and medical device manufacturer Minrad International continued its more than year-long decline, dropping by 46 percent in the third quarter after posting an $11.7 million second-quarter loss, disappointing investors who were hoping the company's rising sales would soon help it become profitable.
Minrad also is embroiled in a dispute with its main distributor, RxElite Holdings, over its attempt to pull RxElite's exclusive distribution rights for some of its anesthesia products. Minrad claimed that RxElite had defaulted on its agreement -- a charge that RxElite disputed.
Falling energy prices took a toll on two other local firms, National Fuel Gas Co. and Graham Inc.
National Fuel investors were disappointed because company executives predicted in August that earnings wouldn't keep rising as fast as analysts expected, contributing to a 29 percent drop for the quarter.
Graham's shares tumbled by 27 percent as sliding oil prices drove off some investors worried that the drop could cut into demand for the condensers and other equipment that the company makes for oil refineries.
"Graham's come down as oil prices have come down, but I would think the outlook still is promising because of the need to build new refineries in this country," said Brad McAdam, the Bullfinch Funds' research director.