Latching onto Amalgamated Pie Plate. Boondocks may harbor bargains, and regional brokers keep tabs

``How many brokers do you know that follow Otter Tail Power & Light?'' There probably aren't too many, guesses Maxine Beissel, an analyst at Piper, Jaffray & Hopwood Inc., a brokerage - regional brokerage - in Minneapolis that keeps tabs on the Fergus Falls, Minn., utility.

There are hundreds of small, out-of-the-way public companies and utilities that don't get the attention of the big New York-based securities firms like Merrill Lynch, PaineWebber, or Shearson Lehman Brothers. But these small companies can often get attention in the research reports of one of the many regional brokerage firms headquartered in cities around the United States - by definition, anywhere but New York.

While many of these brokerages also provide research on some of the large ``blue chip'' companies, it's often because those companies are based in that brokerage's area, the company may have a branch operation there, or it's a competitor of a local company.

Other regional brokers specialize in certain industries, like high technology, agriculture, automobiles, or banking.

For many investors, the regionals are the best place to find out about the ``secondary'' stocks, a group whose performance has been lagging the blue chips in the bull market that began in 1982. Some analysts believe that when the bear market for big stocks does come, the smaller companies may move up.

Last week the big stocks gave mixed signals on where they are headed, as the Dow Jones industrial average moved down, then up - way up on Tuesday, with a record one-day gain of 75.23 points - and down again, but managed to finish the week at 2,570.17, up 45.53 points.

``I think it's possible'' secondary stocks may move up somewhat if top-tier stocks head down, Ms. Beissel says. ``You might see some investors in the US going toward secondary stocks.'' A big rally in this group is unlikely, she believes, because much of the fuel for the market is still coming for foreign investors who tend to stick with well-known, big-name companies.

The secondary stocks ``may come back,'' cautions Charles Comer, senior vice-president and market strategist at the Boston-based Moseley Securities Corporation. ``When we look at where the opportunities are, the big-capitalization companies are trading at impressive multiples. At some point, the second-tier stocks may catch up.''

If that happens, Mr. Comer sees companies like The Banking Center in Waterbury, Conn., and General Host of Stamford, Conn., as prime candidates for gain. General Host owns two national nursery chains, Frank's Nursery and Flower Time, that he says are recovering from earlier management problems and capitalizing on Americans' blossoming interest in gardening.

While regional brokerages can help you find second-tier companies, not all provide equally good research and service.

Some regional firms ``have chosen to specialize and to really find a niche in the market,'' says Allen Mottur, vice-president and head of the financial services group at Temple, Barker & Sloane, a Lexington, Mass., consulting firm. The successful firms, he says, have ``focused in on really understanding their particular region, understanding what makes the companies in that area tick. Then they can present an image to their potential customers of in-depth knowledge.''

Sometimes, Mr. Mottur adds, the ``image'' of in-depth knowledge is all these firms have, since some of them buy research from other companies and then sometimes package it with their name on it. ``But this really isn't a consumer issue. It's good research,'' he says.

``We have built a proprietary niche in our ability to keep in touch with and continually follow the interesting companies in our region,'' says Elliott L. Schlang, senior vice-president at Prescott, Ball & Turben Inc., a regional brokerage in Cleveland. Having an intimate knowledge of a region sometimes helps find companies that go against the national image of that area, Mr. Schlang says.

``I really detest the term `rust belt.' I don't think anything's rusting here except people's perception of the area,'' he says. ``While the focus is on the steel decay, machine tools, and so on, there are many of these companies that have been given birth over the last few years that are doing very very well - specialty niche companies that year after year have shown improvement in earnings.''

The kinds of the companies on this list, Schlang says, include Safety Kleen Corporation, an Elgin, Ill., supplier of cleaning equipment for mechanics; Philips Industries, a Dayton, Ohio housing component manufacturer; and Cintas Corporation, a Cincinnati work uniform company.

For the investor, however, finding the broker that can find the promising secondary companies is the first challenge. ``There's no rating service'' of brokerages, Mottur says, but Forbes magazine and Standard & Poor's (in its Emerging and Sepcial Situations publication) list those brokerages with the best records of underwriting new issues that later do well. In the last Forbes list published in March, the top five underwriters were regional firms.

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