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Legg Mason retail analyst excels at helping others shop for stocks


Sally H. Wallick looks like any other shopper when she strolls along the aisles of Lord & Taylor or BJ's Wholesale Club. But she is on a mission.

A retail analyst at Legg Mason Wood Walker Inc., Wallick walks into stores with her eyes as wide open as a child's in Toys 'R' Us, picking up as much information as she can. Are the toys selling? Are the shelves cluttered? Is merchandise strewn about the aisles?

"Even when I am in [a store] as a consumer, I kind of feel like I am on the job," Wallick said. "Most analysts don't turn it off when they leave the office."

Wallick's job is to study companies and pick the ones that she believes will make the best investments for Legg Mason clients.

She is so good at what she does that in July she was named the country's top "broad line" retail analyst by the Wall Street Journal for 1999, beating out a dozen other analysts.

Wallick, who tracks discount retailers and department stores that sell a broad selection of food and merchandise, won the award based on gains in the stocks she picked.

She advised investors to buy Wal-Mart Stores Inc., which soared 70 percent last year, and Costco Wholesale Corp., which rose 27 percent. She rated BJ's, a wholesale food and merchandiser, a "strong buy" last year, and investors were rewarded as the stock jumped 58 percent.

"She is a renowned stock-picker," said Elizabeth Shamir, a retail analyst at Philadelphia-based PNC Advisors. "She is very insightful. She gets to the point, and she understands that it is not just about knowing interesting facts but picking stocks."

Wallick, 51, doesn't come across as a swaggering all-star. She's gentle, studious and easy to talk with. Colleagues say her personality and temperament play in her favor.

"She is very even-keeled and doesn't get too emotional," said Ira Malis, director of research at Legg Mason. "She can look at these stocks from her head and not from her heart."

Richard Cripps, Legg Mason's chief market strategist, said Wallick works hard. He is a member of an investment committee that reviews her reports and recommendations before they are released to mutual fund companies, investment advisers and banks that buy the information from Legg Mason.

"She is very, very diligent and thorough. Rarely is she caught flatfooted or wrong in the information she is using," said Cripps.

Wallick, who is married and lives in Columbia, is reluctant to talk about what has made her successful. She arrives regularly at the office before 7 a.m. and leaves at about 5:30 p.m. She often works another hour in the evening.

"A lot of people in this business are perfectionists," she said. They work very hard, do all they can to be right, and hate to be wrong.

But all are wrong sometimes. Like many other analysts, Wallick was caught off guard when Rite Aid Corp.'s problems began unfolding early last year. She maintained an "outperform" rating on the company, which means that she expected the stock to do better than the broader market. She believed that good news lay ahead.

But problems worsened, and Martin L. Grass, the chairman of the Camp Hill, Pa.-based drug store chain, was forced out.

In many ways, Wallick is the perfect type of person to be an analyst: She's analytical, she loves to read and she loves numbers.

Her parents, Ed Petzoldt, an Air Force navigator, and Bettie, a homemaker, encouraged Wallick and her four siblings to read anything they could get their hands on. Wallick also had a knack for numbers. After graduating from high school, she worked as a bookkeeper on a military installation in Turkey, where her father ran an air defense command post for NATO.

Petzoldt remembers that even as a youngster, his daughter was driven. When the family lived in Japan, Wallick wanted to become a competitive swimmer, and she would rise at 6 a.m. to practice, he recalled.

Wallick didn't follow the usual path to become an analyst. She graduated from Virginia's College of William & Mary in 1976 with a degree in art history and thought she might become a librarian or work in a museum. After graduation, she thought about graduate school in library science or art history but decided that she had better make a living. She moved to New York and landed a job as a secretary with a small investment-counseling firm.

Her boss promised her that after six months of filing and opening mail, she could work with the analysts, writing reports and studying companies and trends. She loved the work and was convinced that she could become as good an analyst as any. But Wallick wanted to move back to Baltimore, where she was born and had family. She was offered a job in 1978 at Alex. Brown Inc., assisting the analyst who covered trucking companies. Two years later, she had earned a master's degree in business at Loyola College. She also began following railroads and ocean shipping concerns.

Alex. Brown, however, became heavily focused on growth companies, such as technology firms, and the railroads fell out of favor. Wallick left in 1993 and joined Legg Mason to cover retail. The firm gave her freedom to roam and locate companies that she believed were the most important to follow.

Last weekend, Wallick took a cruise. A company she follows, Carnival Corp., held an investor meeting on a new vessel that it unveiled in New York. There was nothing glamorous about the trip. The ship sailed for a little more than a day and docked back in New York. "It was a cruise to nowhere," Wallick said.

For Wallick, the trip to nowhere was worth it. She saw first-hand Carnival's newest ship, she talked with management away from the distractions of phones and faxes, and she even learned about the ship's new propulsion system.

Said Wallick, "From my standpoint, it was very interesting."

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