It was a pretty good summer for the stocks that make up the Buffalo Portfolio.
After suffering through a disappointing spring, the local stocks bounced back sharply during the summer, posting a 5.3 percent gain that essentially wiped out the second quarter losses and left the Buffalo Portfolio with a small gain for the year.
The gain from the local stocks was the best quarterly performance by the Buffalo Portfolio since last year's fourth quarter and it was right in line with the performance of the broader stock market during the summer.
Two local stocks went up for every one that went down during the quarter, with nearly a third of the stocks going up by more than 10 percent.
In some ways, the third quarter was a mirror image of the second. The hottest stock - Buffalo life sciences company Cleveland BioLabs - had been the weakest stock during the second quarter, while Gibraltar Industries, the second-worst stock in the spring, was the second-best during the summer.
Likewise, Buffalo Internet content provider Synacor Inc. went from being the hottest local stock in the second quarter to its coldest during the third, and had the dubious distinction of being the only local stock to lose more than 10 percent.
In the end, the Buffalo Portfolio's gain pretty much matched the pace set by the broader market. The local stocks did a little better than the 4.4 percent gain by the Dow Jones Industrial Average, about the same as the 5.5 percent rise by the Standard & Poor's 500 index and the 5.6 percent jump by the Nasdaq Composite Index. The local stocks did better than the 3.6 percent gain by the Russell 2000 index of small company stocks, which is more representative of the make-up of the Buffalo Portfolio.
The local stocks have alternated between similarly-sized gains and losses for the last five quarters.
The third-quarter gain also capped the Buffalo Portfolio's recovery from the devastating declines it experienced in 2008 and early 2009. An investor who owned a single share of each of the locally based companies ended the quarter with a portfolio that was worth 4 percent more than it was at the end of September 2008.
No company had a better summer than Cleveland BioLabs, whose stock soared by 70.7 percent after plunging by 36 percent in the second quarter. The life science company, whose stock had been hammered since the spring of 2011 because of questions over key federal funding sources, began to bounce back after the firm said earlier this month that it had come to terms with the U.S. Food and Drug Administration over plans for crucial clinical trials for its anti-radiation sickness drug.
The agreement, outlined in an advice letter from the FDA, could remove what had been a major hurdle in Cleveland BioLabs' quest to obtain funding from federal or other funding sources that had been reluctant to commit more money to the company to fund its essential studies until it was certain that the studies were designed in a way that satisfied federal regulators.
Cleveland BioLabs' anti-radiation sickness drug, now called Entolimod, has shown promise in earlier-stage tests in limiting the damage from exposure to radiation, but needs further studies to gain approval as a treatment for people exposed to radiation in a terrorist attack, nuclear accident or other events that result in potentially fatal radiation exposure.
Gibraltar Industries also had a strong rebound, with its shares jumping by 25 percent after the Hamburg building products manufacturer bounced back from a disappointing first quarter to report a 10 percent gain in its second-quarter profits. While Gibraltar's key housing and construction markets remain weak, the company has managed to lower its break-even point by restructuring its operations to significantly reduce operating costs.
Sovran Self Storage also had a good quarter, with the Amherst real estate investment trust's shares rising by 15.5 percent after its earnings jumped by 21 percent during the second quarter. Sovran also has been reshaping its portfolio of Uncle Bob's self-storage stores, selling off $35 million in stores in Texas, while acquiring 13 other higher-end properties and selling five others.
"Sovran is continuing with its portfolio repositioning program, in which it divests non-core assets and targets high-quality assets in attractive, lucrative markets with bettern growth opportunities," Zacks Equity Research said in a report.
On the downside, former high-flyer Synacor came back down to earth, with its shares sinking by 44.7 percent as the technology company was hit by a wave of selling as the lock-up period expired that prevented insiders from selling shares following its initial public stock offering this spring. The company also said its revenues for this year would be on the low end of its forecasts.
Buffalo-based specialty printer Mod-Pac had another rough quarter, with its shares dropping by 9.7 percent after the company reported its second consecutive quarterly loss.