Managed Futures Are Becoming Valuable Assets
Since the 1987 stock market crash, institutional investors and pension fund executives have shown an increased interest in tactical asset allocation strategies. While the traditional asset allocation for pension funds of cash, stocks, and bonds is an appropriate strategy, it is a limiting one. Allocating a small percentage of a portfolio to managers who specialize in trading in futures and options may allow for a broader and more effective diversification. Dozens of asset classes are available for trading via futures and options exchanges worldwide. Futures managers also can avail themselves of a broad range of capital and commodity markets. Unlike conventional asset allocators, futures managers can protect themselves against declining markets by selling short the underlying market. Successful futures managers can make profits not correlated with rising stock prices or declining interest rates. Because of these successes, institutions and corporations are beginning to view futures as a potential class for investment, rather than only as speculation.
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Dubin, Glenn
Swieca, Henry
Full text: [Pension World] Oct 1989
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Learning from Mistakes
In the wake of Shearson Lehman Hutton’s withdrawn proposal to trade unbundled stock units (USU), learning from Shearson’s failure could help the next USU proposal succeed. USUs could have traded at a discount relative to shares, which made them unattractive to shareholders. A tax-exempt shareholder would be better off not exchanging shares slightly above par unless revised terms of 1.1 units per share would be offered. The prospect of an 8% discount of an unbundled unit relative to a share resulted in an excessive waste of value; nor do nominal price and dividend guarantees help because their values are eroded by inflation. Shareholders would have no incentive to exchange shares for unbundled units unless compensation is provided for the expected secondary market discount of USUs and for 30-year relinquishment of voting rights. The next generation of USUs must avoid these pitfalls by creating a tax shield and mitigating the threat of tax-motivated takeovers.
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Sah, Raaj
Vasavada, Navendu
Full text: [Intermarket] Oct 1989
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Losses of Local Brokers Prompt Queries by FBI
The FBI and the Minnesota Commerce Department are inves
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Gillam, Carey
Full text: [Minneapolis / St. Paul CityBusiness] Oct 09, 1989
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Junk Bond Market Reeling From Price Plunge, Local Holdings Appear Stable
When financial troubles surfaced last month for Campeau Corp., the junk bond market panicked. Prices plunged as bondholders rushed to sell, spurred by the fear that highly-leveraged companies — like Campeau — would not be able to make interest payments on their debt. Although few Indianapolis companies play the junk-bond game, Conseco Inc., Anacomp Inc., Circle Express Inc. and others have issued high-yield bonds to fund growth and acquisitions. However, local sources say the high-yielding issues of most local companies should remain unscathed by September’s junk bond debacle despite the market’s uncertainty. (excerpt)
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Marson, Carla
Full text: [Indianapolis Business Journal] Oct 09, 1989
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Conseco Partners? Stock Rallies as Company Announces Intent to Form Acquisition Group With Institutional Investors
Conseco Inc. stock jumped to an all-time high last week when the Carmel-based company revealed it is talking with several institutional investors about forming a partnership to buy life-insurance companies. Coupled with recent maneuvers to lower its debt burden, the possible partnership left Wall Street with the impression Conseco is searching for further acquisitions without overloading its already leveraged balance sheet. Conseco also would benefit from revenue streams created by fees charged for management, data processing and other costs incurred in operating the acquired companies. (excerpt)
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Ketzenberger, John
Full text: [Indianapolis Business Journal] Oct 09, 1989
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Savings and Loans Are Top Gainers in 3rd Quarter
Local savings-and-loan institutions rode a wave of takeover speculation to become the top stock-price gainers in the third quarter, while auto suppliers generally lost ground due to declining automotive production. The stock prices of auto suppliers are expected to stabilize in the fourth quarter –albeit at depressed levels as auto production continues to slump, said Dean Gulis, director of research at Detroit-based Roney & Co. Thrift stock prices, meanwhile, will rise and fall in the fourth quarter based on earnings performance, balance-sheet health and more traditional investment indicators, said James Leonard, director of research at First of Michigan Corp. in Detroit. (excerpt)
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Barkholz, David
Full text: [Crain's Detroit Business] Oct 09, 1989
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Region’s Banks Rank Favorably in Industry Report
Stock in TrustCo Bank Corp NY jumped more than 11 percent following the release of a favorable First Albany Corp. report, and the stock of two other Capital Region banks showed small gains. In his Sept. 12 review of 1988 and first-half 1989 results for 10 upstate New York commercial banks, First Albany bank analyst Donald Kauth rated TrustCo, Evergreen Bancorp Inc. and Arrow Bank Corp. as “buys.” On Sept. 12, TrustCo stock was selling for $28.50 a share; on Sept. 19, the stock closed at $32, up 11.3 percent. (excerpt)
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Ballman, Barbara
Full text: [Capital District Business Review] Oct 09, 1989
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Take That, Jimmy Goldsmith
On September 26, 1989, Patrick Sheehy, chairman of UK conglomerate BAT Industries PLC, agreed to restructure the tobacco, retailing, financial services, and paper giant he helped build. Selling off paper and retailing interests will leave BAT with its tobacco and insurance businesses. These holdings include Brown & Williamson Tobacco and its Eagle Star, Allied Dunbar, and Farmers Group insurance units, all of which make up 80% of BAT’s estimated 1989 pretax profits of $3.2 billion. Investors seemed to support Sheehy’s move. His greatest challenge will be selling the US retailing units, including Saks Fifth Avenue and Marshall Field’s, at a time when the US has many firms for sale. The fact that Sheehy is willing to carry out this plan is enough to block James Goldsmith’s attempt to take over BAT. Whether Goldsmith will continue his takeover attempt is questionable. Continuing the bid could be expensive. Goldsmith has, however, stirred debate across Europe on the future of conglomerates. Some organizations are seeking to restructure their firms.
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Melcher, Richard A.
Full text: [Business Week] Oct 9, 1989
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Up, up and Away: Mutual Fund Performance Took Off in the Third Quarter
Most mutual fund investors benefited in the 3rd quarter of 1989 as a result of rising stock markets in the US and abroad. Airline takeovers and buyouts helped improve the performance of some top funds, while other funds benefited from new enthusiasm for biotechnology. The average return for all equity funds rose 9.56%, and broad-based general equity funds rose 9.21%. On an annualized basis, this would be 42.25%. Funds and groups that outperformed the indexes included the health and biotechnology firms. For example, Financial Strategic Health Sciences rose 24.76% during the 3rd quarter, compared to 16.68% for the group. International funds rose 13.79%, and global funds rose 11.65%. National Aviation & Technology rose 27.84% in the 3rd quarter and 63.43% for the year to date. This makes it the leading big fund so far in 1989.
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Eaton, Leslie
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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Storing Up Value: Why Bargain Hunters Are Attracted to Petrie Stores
Petrie Stores Corp., which runs a large chain of women’s apparel outlets, is the frequent subject of speculation. Milton Petrie, the 86-year-old founder, chairman, president, chief executive, namesake, and majority stockholder of Petrie, has not chosen a successor. Lately, Petrie’s shares have been affected by declining earnings. Petrie’s 14% stake in Toys “R” Us, other investments, and an improving balance sheet have been attracting investors to Petrie, in spite of the setback in earnings. The company has some 1,600 stores. It avoids advertising, seeking to draw customers through reasonable pricing. In 1988, Petrie swapped 14.2 million shares of its Toys “R” Us stock for $350 million in outstanding 7 1/2% and 8% subordinated debentures. This lowered the company’s annual interest expense by $27 million. Milton Petrie has invested in such companies as Chock Full ‘O Nuts and Claire’s Stores, but one of his favorite investments has been Petrie.
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Savitz, Eric J.
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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On the Junk Heap: The Trashing of a Multibillion-Dollar California S&L
Imperial Savings was founded in the early 1950s and grew steadily through the real estate booms in Southern California in the 1950s and 1960s. In the 1980s, however, Imperial suffered large losses. In 1979, Saul Steinberg became its largest shareholder. He helped oversee the division of Imperial into a California unit and a Texas unit. In 1982, Steinberg sold his share of Imperial to Victor Goulet. In 1985, Goulet and the other directors of Imperial Corp. of America (ICA), Imperial’s parent company, decided that bold action was needed to save ICA from its mounting losses. Kenneth J. Thygerson was brought in to head the savings and loan (S&L) association. ICA then began to purchase large amounts of junk bonds. Within about 2 years, ICA purchased approximately $1.5 billion in high-yield bonds. Today, ICA’s stockholders have lost over $100 million in value.
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Stein, Benjamin J.
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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Household International Inc.: It Looks to Thrift Acquisitions as a Fast Lane to Growth
Household International Inc. has been acquiring troubled savings and loan (S&L) associations as a new way to grow quickly. Household has acquired troubled S&Ls in 6 states, which has given it a solid foothold in conventional consumer banking. Acquiring S&Ls and reshaping them as Household banks is a key part of the company’s plan to double its size to over $40 billion in assets in 5 years. Expansion into conventional banking is allowing Household to more highly leverage its assets. Previously, Household had to maintain a conservative debt-to-equity ratio to secure its double-A credit ratings. To control expenses and improve productivity, Household is benefiting from greater automation and the shift of backroom processing from consumer-finance offices to regional processing centers. This will enhance revenues by allowing consumer finance offices to concentrate on lending and other customer services.
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Byrne, Harlan S.
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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Hans Across the Sea: A Swiss Money Manager Scores Big in the U.S.
In an interview, Hans Thomann, money manager of the US-based equity investments of Winterthur (Switzerland), said that the stock market probably is at the last stage of a bull market. Making long-term investments is risky because of the uncertainty of the value of the dollar. If the dollar becomes a little weak and if strong retail sales make the 1989 4th-quarter statistics appear better than people expect, then there may be a small revival in inflation fears. Essentially, the latest figures on home resales, car sales, and durable-goods orders are above expectations. Without the stock market crash of 1987, the economy would not have been robust in 1988 and 1989. On a global basis, liquidity still is decreasing. The UK may have a recession in 1990. In the US, the 4th quarter could be surprisingly good in terms of statistics.
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Welling, Kathryn M.
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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Funds: Best of the Babies
Safeco Income Fund, managed by Arley Hudson, has 2 objectives: 1. to obtain high current yields, and 2. to obtain long-term growth of capital. Today, the stock that best fits this formula is BellSouth Corp. BellSouth’s current annual dividend is $2.52, and Hudson believes that it will increase by about 6% a year. The company is diversifying into areas in which returns are not limited by state utility commissions. BellSouth currently is nearing the final stages of combining its cellular properties with those of LIN Broadcasting. LIN Broadcasting will spin off its television stations to its shareholders when the joint venture is completed. At first, BellSouth will hold half the venture, with rights to own it all eventually. This approach prevents near-term dilution of earnings per share.
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Cochran, Thomas M.
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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Casting for Net-Nets: A Computer Turns Up a Motley Crew of Them
Essentially, a net-net compares a company’s liquid assets with its valuation in the stock market. A net-net provides a quick measure of how much cash a company could raise through a quick sale of assets. FactSet Data Systems compiled a list of companies from COMPUSTAT’s database. Some 51 companies, consisting of 24 net-nets and 27 near net-nets, are on the list. The near net-nets include Kit Manufacturing, Traditional Industries, and Exar Corp. The industries that are disproportionately represented on the list include the computer and data processing industry and the footwear industry. Computer Factory, a retailer of microcomputers and software, is suffering from intense competition and increased operating costs. Penobscot Shoe, a manufacturer of women’s leather shoes, has been hurt by high costs and the popularity of athletic shoes. A list of the 51 companies is provided.
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Palmer, Jay
Full text: [Barron's National Business and Financial Weekly] Oct 9, 1989
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KMW Deal Gives Both Sides What They Need
When stock prices tumbled in October 1987, the shares of Austin’s KMW Systems Inc. went with them. Following Black Monday, KMW’s stock fell to a low of $2.84 per share. The historic high had been $10.12 per share. Unlike the Dow Jones industrial average, which has surpassed pre-crash levels, KMW’s stock — like that of many other small companies — has remained in the dumps. In 1988, the stock rose to $5 a share at one point, but has gotten no higher than $4.50 per share in 1989; the low has been $3 a share. (excerpt)
preconstruction investing
Green, Tim
Full text: [Austin Business Journal] Oct 09, 1989
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Saatchi Surge
As Saatchi & Saatchi Co’s stock price soared recently, contradictory rumors had the London company facing increased investment by a US financial institution and/or an imminent takevoer bid.
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Wentz, Laurel
Levin, Gary
Full text: [Advertising Age] Oct 9, 1989
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Comfortably off: Soft Landing for Malaysia’s Plantation Companies
While earnings from Malaysian plantation companies are expected to decline from record levels by up to 15%-20% in the first half of 1990, swollen cash reserves will allow most firms to smooth out the impact of lower palm oil and rubber prices on dividend flows. Poorer commodity price prospects have also refocused the attention of Malaysia’s major agriculture-based companies on yield improvement and on cutting costs. Despite a general optimism over the long-term competitiveness of Malaysian plantation companies because of their large research and development outlays and experienced management, most brokers are not yet willing to send out a buy signal. With rising Malaysian land prices and a dearth of available first-class agricultural land in West Malaysia, plantation companies are doing quite a bit of buying and selling. Consolidated Plantations has spent $12.8 million on the purchase of refiner and marketer Sime Darby Edible Products from Sime’s Singapore arm and has increased its Dunlop Malaysian Industries’ latex products capacity.
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Friedland, Jonathan
Full text: [Far Eastern Economic Review] Oct 12, 1989
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Doskocil Cos. Hit Hard by Failure to Sell Wilson Unit
A failed attempt by Doskocil Cos. to sell a portion of its Wilson Foods assets is having a debilitating effect on the South Hutchinson meat processor — and its investors. Just a month after WFC Acquisitions Corp. failed for the second time to secure financing to buy Wilson’s retail and fresh meat businesses, Doskocil’s national over-the-counter stock price has fallen in a matter of weeks from $8 to $5.63 per share. That marks a significant decline from the $13.50 that the stock was bringing just prior to WFC’s initial offer to buy the properties in June and a $14.13 peak in May. (excerpt)
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Groene, Lee Ann
Full text: [Wichita Business Journal] Oct 16, 1989
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Apache Investors Like What They See in Revamped Company
Investors have rewarded Apache Corp. for its extensive restructuring last year by nearly tripling the value of the company’s stock. The $701 million-asset oil and gas company, which derives most of its revenues from U.S. natural gas production, saw its stock reach almost $17 a share last week, up from a low of $6 a share in mid-1988. That was when Apache officers announced they would restructure the 35-year-old company and begin funding its operations solely with revenues from operations. For several years previously, Apache had been an industry leader in the marketing and sale of oil and gas partnerships. But last year, the company rolled up its Apache Petroleum Co. master limited partnership, in which Apache Corp. was general partner. Apache exchanged 12.1 million shares of its common stock for publicly held units in the partnership, taking on $110 million in debt in the process. (excerpt)
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Sample, James O.
Full text: [The Denver Business Journal] Oct 16, 1989
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