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The region’s 10 biggest publicly traded companies lost a combined $2.7 billion in market value since Lehman Brothers’ bankruptcy filing on Sept. 15, 2008. These companies had a combined market capitalization of $43.6 billion the day Lehman tumbled into obscurity. Their combined market cap — a company’s share price multiplied by shares outstanding — was down to $40.9 billion as of Sept. 10 this year.

The biggest laggards were FTI Consulting Inc., down 50.4 percent, and Constellation Energy Group Inc., off 35.3 percent. Shares of Legg Mason Inc. fell 21.4 percent over that period.

Those declines are from three to nine times worse than how the Standard & Poor’s 500 index did over the same period. The S&P, a broad gauge of large-company stock performance, fell 6.9 percent during that time.

But the pain has not been shared equally. Half of the 10 stocks fell, by an average of 23.4 percent. The other five rose an average of 24.6 percent.

The leader: W.R. Grace & Co., whose shares gained 52.9 percent, even while the company remains under Chapter 11 bankruptcy protection. It was followed by Micros Systems Inc., up 40.6 percent, and Under Armour Inc. The athletic apparel maker’s stock rose 19.4 percent.

How the stocks of Greater Baltimore’s largest public companies perform matters both to investors and Greater Baltimore’s economy. These companies are among the region’s biggest employers. If their stocks suffer, layoffs can — and did — happen. Their shares are a part of local investors’ portfolios, meaning that a chunk of many peoples’ financial security is tied to how well they perform.

What has happened in Baltimore reflects how the Great Recession has whacked the financial services industry, said William Longbrake, co-director of the Center for Financial Policy at the University of Maryland’s Robert H. Smith School of Business. That helps explain why shares of Legg Mason Inc. and T. Rowe Price Group Inc. are trading below their September 2008 levels. T. Rowe Price’s stock is off 9.9 percent.

“What stock prices do is look to the future,” said Longbrake, formerly chief financial officer for Washington Mutual, the defunct Seattle bank, from 1982 to 2002. “When revenues are down, and earnings are squeezed, stock prices are going to go down.”

But each company has its own story. Some will outshine the market and others will lag behind depending on their individual responses to the economy and the challenges of their particular industry.

“Like separating the sheep from the goats, the best-performing companies will break out of the pack,” Longbrake said.

Both businesses and consumers created stagnancy in the market. Companies cut back on big purchases of technology and equipment. Consumers dramatically pared discretionary spending.

Yet, two of Greater Baltimore’s biggest public companies were able to overcome those obstacles. Micros, which makes software used to process sales and track inventory for hotels, has convinced hoteliers its technology will lower costs, said Niall O’Malley, a portfolio manager.

And Under Armour has done a good job of growing sales by skillful marketing of its athletic shoes and clothing, said O’Malley, managing director at Blue Point Investment Management.

On the other end of the spectrum, FTI Consulting’s lagging stock price is tied to the downturn in mergers and acquisitions activity. Part of the company’s business involves advising companies on M&A and corporate finance. Both slowed during the recession.

That doesn’t necessarily mean FTI is not an attractive stock. Lower prices mean bargains for investors willing to take a risk.

“At this point, we think it’s pretty attractively priced,” said Michael Fusting, co-chief investment officer at Corbyn Investment Management in Lutherville. Cobryn is the adviser to the Greenspring Fund, a $700 million mutual fund that invests in undervalued companies.

Its holdings include FTI. FTI was the Greenspring Fund’s second-largest holding, as of Aug. 31, accounting for 3.3 percent of the fund’s net assets.

Constellation Energy has had some well-publicized financial woes during the past two years. That explains why its share price has fallen by more than one-third since September 2008. A credit crunch nearly led to the company’s sale in 2008 to MidAmerican Energy Holdings Co.

Instead, Constellation regrouped during the past two years, paying down debt, parting with non-core business units and selling just less than half of its nuclear business to French utility EDF Group for $4.5 billion.

Constellation’s shares have doubled in price since hitting a low of $15.50 on March 6, 2009. Shares were trading at $31.47 on Sept. 16.

Read more: Lehman Bros.’ fall still dogging some of Baltimore’s largest stocks | Baltimore Business Journal

Many of them are still well below early 2008 levels. Shares of Constellation Energy Group Inc., which was pulled to the brink of bankruptcy that fall, are worth half of what they were before the downward spiral. The same can be said for Legg Mason Inc. or FTI Consulting Inc. Others, like McCormick & Co., W.R. Grace & Co. and T. Rowe Price Group Inc., are at or above pre-recession prices.

Stocks’ prices relative to previous peaks depend largely on how businesses — and their earnings, in particular — have been affected by the recession. Some, like Constellation, were forced to shed risky and expensive business activity and now face a perception of lower potential for profits. Others, such as Columbia-based real estate investment trust Corporate Office Properties Trust, have come out ahead as they have been able to outmaneuver competitors felled by the economy.

“You had systemic change in 2008 with the financial crisis,” said Niall O’Malley, managing director of Baltimore investment adviser Blue Point Investment Management LLC. “These large corporations are challenged because what they were developing themselves for in their market has shifted.”

How companies manage those new environments will determine where share prices go from here, stock market observers said. But what they can do also depends on how Washington decides to regulate Wall Street going forward.

Constellation was perhaps the preeminent local face of the rapid economic deterioration of September 2008. Linked to Lehman Bros., then headed toward bankruptcy itself, the energy company faced a dangerous cash crunch in its commodities trading business. Its stock price had been between $70 and $80 per share that summer, but as the Dow plunged below 10,000 for the first time since 2004, Constellation’s shares fell as low as $25 in October 2008.

After a flurry of negotiations with French utility EDF Group and billionaire Warren Buffett, the company nearly consummated a deal to be bought by Buffett’s Mid-American Energy for $4.7 billion. That union was nixed in December 2008 in favor of a $4.5 billion sale of half of Constellation’s nuclear assets to EDF.

Since then, the company has moved ahead with a rebuilding plan, but its stock hasn’t matched previous levels. And it may not in the future. But that is not a surprise, said Angie Storozynski, an analyst with Macquarie Capital, who covers energy companies.

“They don’t have 50 percent of their nuclear plants, and they don’t have a trading business,” she said. “That has to be adjusted.”

Storozynski is expecting a $41 per share price within the next year; shares closed at $37.47 April 21. She pointed to the company’s 36 percent spike in share price over 2009 as a sign of strength over others in the energy industry.

Jack Thayer, Constellation’s chief financial officer, said in an interview that for his company and others impacted by the financial crisis, that is to be expected. To right itself for the future, Constellation has focused on strengthening its business generating and selling power. It sold off its coal and natural gas trading business units to shed risk and reduce its need for large amounts of cash.

“Anytime you divest businesses that are performing, clearly you’re choosing to focus your strategy, and you reduce your prospective earnings outlook,” Thayer said. But he said he expects the growth in the generation business to make up for the profits from the lost business units.

Other firms have had to make similar adjustments that make them a gamble for investors. Banks, for example, are under increasing scrutiny to limit overdraft fees on consumers’ checking accounts, said Jeff Rottinghaus, portfolio manager of the U.S. Large-Cap Core Fund at T. Rowe Price. Bank of America, for example, Greater Baltimore’s largest by market share, plans to end overdraft charges this summer, prompted by federal regulation. Its stock closed at $18.28 April 21, down from a peak of $37.48 in September 2008.

Rottinghaus predicts that instead, banks will look to new fees on opening checking accounts or on loan products. Whether that will allow them to command the same amount of earnings remains to be seen.

“Businesses will always adapt and always try and find a way to recover any lost revenue,” he said. But with the muddled picture for future financial regulation, the companies “can’t speak with a tremendous amount of certainty as to what their business model is going to look like. It’s difficult to model what their potential earnings power could be,” Rottinghaus said.

Still, other companies have been required to take new tactics because of the economy and ended up ahead. Spice maker McCormick has enjoyed profits stemming from more families opting for cheaper, home-cooked meals. And Corporate Office Properties Trust has rode the surge in opportunity coming through federal government and military spending.

Read more: Baltimore stocks go high and low as market rebounds | Baltimore Business Journal

“Niall O’Malley has impeccable timing.  The businessman began seeing the cracks in the American economic system three years ago and decided to leave his job as vice-president…”

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