WHEN DAWN ALSTON PAIGE, CO-FOUNDER OF Durham, North Carolina-based Piedmont Investment Advisors (No. 12 on the BE ASSET MANAGERS list with $1.4 billion in assets under management), picked Office Depot as part of a defensive-minded portfolio, she thought the stock would rise by about $10 to a target of $50 per share within 12 to 18 months (See "Defensive Moves," Moneywise, December 2006).
But after approaching $45 last fall, Office Depot shares have dropped by nearly 47%, to the $21 range. Office Depot executives have blamed the housing recession for a pullback in spending by small businesses, its prime customers. Office Depot's woes dragged down the overall performance of Paige's five-stock portfolio to a gain 15.7%, just behind the 18% increase of the S&P 500 index.
MEMC Electronic Materials Inc. performed the best of Paige's picks, returning 69.1%. The company's polysilicon is used not just in microchips but in the burgeoning solar panel industry as well. Oil refiner Valero Energy Corp., meanwhile, was another big winner, posting a 51% gain. "It's a good long-term holding," Paige says...