Q-Is it true that trades made by corporate officers of companies in their own stock really say a great deal about the investment prospects of those firms? Or is that oversimplifying matters?
A-Sometimes simple really does make sense.
Those trades can indicate a lot, since corporate officers and directors generally know best whether there’s reason for confidence about a company’s future.
CompUSA Inc., Fleming Cos., Mueller Industries, Rayonier Inc., Eljer Industries, Alliance Imaging, Iomega Corp., Retirement Care Association, Conseco Inc., Hannaford Brothers and General Binding are all firms in which key insiders have bought considerable stock lately, according to filings tracked by The Insiders investment letter.
It’s true that an individual corporate insider may sometimes simply sell shares because he or she wants to take profits from a run-up in price or to meet some personal financial needs.
Yet these investment moves are generally a strong barometer, with the purchase of shares of one’s own firm the best sign possible. (The Insiders, published twice monthly at an annual subscription price of $100 at 2200 S.W. 10th Street, Deerfield Beach, Fla. 33442, follows and reports insider buys and sells.
Q-We own shares of Templeton Global Opportunities Trust. Are they worth holding, or should we invest elsewhere?
A-The world is still this fund’s oyster.
The $487 million Templeton Global Opportunities Trust had a modest 3.49 percent gain over the past 12 months, but still ranked in the upper one-third of world stock funds during that volatile period. Its three-year average annual return was a stronger 11.53 percent.
This fund, which can invest in a variety of stocks and debt obligations, recently held securities from 23 countries. About 26 percent of the portfolio was in U.S. stocks. Other significant country holdings were Sweden, Hong Kong, Canada and Switzerland.
Industrial cyclicals and consumer durables constitute the largest portion of its portfolio. The fund requires a 5.75 percent “load” (initial sales charge).
“Templeton Global Opportunities Trust is a good core holding with reasonable risk that should appeal to average investors,” counseled Kathleen Hartman, analyst with the Morningstar Mutual Funds investment advisory.
Q-I have 440 shares of Nucor I’ve owned many years. What are its prospects?
A-Hold inexpensive shares of Nucor Corp. (around $49 a share, New York Stock Exchange), successful manufacturer of steel and steel products, because its mini-mill process makes it the industry’s low-cost producer, said Robert Schenosky, analyst with Smith Barney Inc.
It’s aggressively reaching for market share by boosting steelmaking capacity more than 50 percent by the end of this century, a portion coming from a new mill in 1997.
“Nucor knows technology, has high-quality management and boasts a strong market foothold,” related Schenosky, who predicts 15 percent annual long-term growth. “There’s room for growth.”
Q-I found a certificate for 100 shares of Continental Divide Development Co. in a file of my mother’s. Any value?
A-Impressive-sounding name with unimpressive results.
Property of Denver-based Continental Divide Development Co. was reported to be idle in 1930 and the firm’s charter forfeited in 1936. There were no remaining assets and shares have no value, according to Barbara Bracco, researcher with the New York-based R.M. Smythe & Co. stock-search firm.
Q-I own 700 shares of Leviathan Gas Pipeline, down from the price I paid. Hold or sell?
A-Only an aggressive investor with a diversified portfolio should hold Leviathan Gas Pipeline (around $24, NYSE), a pipeline system that services oil- and natural gas-producing areas of the Gulf of Mexico, said Sharon Conway, based in Chicago with A.G. Edwards & Sons.
“Leviathan has strong growth prospects, high yield and solid balance sheet,” concluded Conway. “But it’s also interest-rate sensitive and dependent on oil and gas prices.”
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Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, “Successful Investing,” Suite 332, 2124 Broadway, New York, N.Y. 10023.
