Evening star., 1920-02-19
STOCKS RESPOND
TOFRESH BUYING
STEUART p. WEST,


reasons stocks were entitled to some
reaction. traders worked on the short
side of the industrials and succeeded
IN driving down the leaders of the list
a point to 3 points. the latter in some
OF the higher priced issues.
But this raiding did not bring out
much real stock and was comparative
ly unimportant.
Rails Act Well.
The railway shares all through the
early decline had acted very well. and
When toward midday fresh buying or
GERS were thrown into these stocks
they met with quick response.
The buying followed indications
which have been quite apparent for
several days past that speculative
syndicates were quietly picking up the
low-priced issues, especially those of
reorganized roads. which are the ones
that stand to benefit most by the ~
per cent rate guarantee.
A remarkable good earning state
ment for the last quarter of 1919 by
the New Haven also had it's effect.
Leaders in Advance.
New Haven stock and ST. Louis and
leaders in the advance. From them
the movement rapidly spread until it
took in practically all the members of
the low-priced group.
1t was noticeable that while the
standard dividend payers advanced
their rise was merely sympathetic.
1t was the shares of the so-cal1ed
weaker lines which were favored be-
cause of the recognition that these
are the ones that will make the best
showing under the 5h per cent clause
in the new railway bill If this is
adopted in its present form.
StfIl BulIish on Rails.
Ill
tween estimates of what the 5h per
cent guarantee will mean for the
earnings Of individual roads 1t is
everywhere agreed that the bill If it
passes in it's present form will be ia
vorable. Nearly all the brokerage let
ters that went out from Wall street
this morning advised the. conservative
picking up of railway shares.
One house thought it noticed signs
of accumulation of these stocks by
pools. Another house was particu-
lariy partial to low priced issues Of
roads which have been reorganized in
recent years and have cut down their
capital heavily. 1t is this class of
properties which will make relatively
the best showing of property values
as a basis of rate making.
81. Louis and San Francisco.
The action of st. Louis and San
Francisco common attracted more and
more attention in connection with the
very high estimates which are being
stock under the 5 u per cent provi-
sion. The Frisco is one of the roads
which has been reorganized and has
suffered a very heavy cut in its cap
ital obligations.
Therefore it figures out as one Of
the best rewarded by the new ssini-
mum rate clause. In some quarters
an earning power OF 50 to $40 per
share is figured: in others the esti-
mates are even higher.
One house that is particularly bull
ish claims that Frisco common will
earn SIS a share under the 51s per
cent rate provision.
Granting even a part of these things
to be true, the 6 per cent income
bonds would seem to be one of the
bargains of the speculative bond list.
These bonds pay per cent interest
which figure they are only up about
four points from their recent low and
at which figure also they yield IA
per cent.
Improving Bank Credit.
One big Wall street operator. who Is
bullish on the rails, takes the position
that any advance in these stocks will
improve the banking position. This
man says that the underlying credit
pOSltlOn OIL Cne DdukS Is wrapped up III
the rails and that anything which i'm
proves these issues will first of all i'm
prove banking credits.
Wabash q Preferred.
Wherever the rails are being dis
cussed these days. and that is just about
everywhere, there is usually good word
said for the Wabash A preferred. Rail
road experts who are familiar with the
property estimate that on the basis of
a ~ per cent guarantee the road will
receive an annual compensation of about
$11. 100000. Income from outside in
vestments should increase this by about
100000 or to approximately $13.000,-
900. This would be equal to SIT a share
on the present amount of preferred A
stock outstanding, and to about $3.50
a share on the amount outstanding when
all of the second preferred has been con-
verted into q preferred and common as
has been provided for.
Butte and Superior.
The Butte and Superior annual re-
port is sufficiently favorable to ex-
plain why the stock has done better
in the recent market than most of the
other mining shares of it's class. Its
total profits for 1919 were $3.50, as
against $40 in 1918. But this was
not the most important point. The
thing of main significance was that
Willie Ihc Company earned scarcely
anything during the first half of the
year. it showed a profit in the third
quarter of $1.03, and in the fourth
quarter of s1.s5.
In other words. it's earnings were
rapidly improving in the latter half
of last year. holding out the prospect
that this Improvement would con-
tinue into 1920.
New Haven Stock.
Even should there be no question
Of the n per cent rate guarantee
from which New Haven. it is calcu-
lated. will be one OF the chief bene-
ficiaries. the earnings statement pub
lished today is a sufficient explana-
ton for the recent improvement in
the stock market. The statement
covers operations for the quarter
ended December 81 and 1t makes an
astonishing comparison with the same
period in 1918. Gross operating reve-
nue. rose from $26,592,063 to $29,s16,-
73S, while the gross income showed an
increase Of close to 81. SOC. 900, while