New-York tribune., 1921-06-19
Mortgage Company Shares Speculative

eusstion-Tns writer has been urged by
friend TO buy at least 100 shares in the
Beacon Mortgage and Finance Corporation.
Briefly this IS a proposition for purchasing
100 shares. present and par value $40 each,
II monthly payments over period of ten
Years This rseans total payments of
Miss, which includes per cent unpaid
Balances of the subscription. These shares
return guaranteed dividend OF per cent
per annum. payable seIni-annually when
ils6 or more hss been paid in. All OF the
funds of this corporation are invested in
eoassrvative fI-st mortgage real estate
hans which. indicates that the factor of
safety is satisfactorily accounted for. On
inc question fos fna-keta bility these people
20 enhanced as to cause the company to
offer same for sale at sl1 per share begin
n.ag July l. 1924 s12 in 1922, and so on
until they reach a value of SIS per share.
end Of ten gesrs the payment of s1,165
ABOVE mentioned viii bring return Of
s15o0 market value of shares, plus $500
interest and pias extra dividends esti-
mated at 81 81. making 1947 in all. The
company VILE mike loans on total numbe
df paid-up sac shares and states that II
Ei sell. at she price prevailing during a
given year. shasas which a subscriber may
wish 20 dispose II. &but they do not offer
10 buy them lack themselves. What is
FeHr opnloat az % the marhetability of
such shares, aad are they justified in ad-
Tsacing the price 81 ,Rxyear because OF the
guaranteed eaTningS on first mortgage
laaas? The ( r4aps4ny makes the state
meat that per ling .sen1iannual dividend
payments a tnscrfbers money can be
oaned at inr rest several times. They
also have tho usual building loan feature
Of loaning to SUBSCRIBERS on the monthly
payment plan. p. G..
Answer--Ns wrote to the Beacon
Mortgage and Finance Company asking
io- essential information about the
stock of thtF company and received
from the general counsel of the COM
pany letter in reply which was not
satisfactory 20 us because it did not
give financial statement, it being ex-
planned that such a statement would
not convey the correct impression be-
cause of the comparatively recent or
ganizatiOn OF the company. But passing
over that W, fear Ahat you are misin-
formed abous the nargin of safety Of
the companys business. If its funds
we're all INVESTED, as you say, "in con-
sentative fist mortgage real estate
loans" the margin Of safety would de-
pend on how much skill and discrimi-
nation the .om panyis finance commit
tee displayed in lending money. (Not
all hrst mortgages are good invest
ments, by my means.1 But counsel's
ietter says the present policy of the
company is to invest it's capital in first
mortgages or loans properly secured"
ana the last clause puts an altogether
different atpect on the situation from
mat which you are i'm pressed with. If
you nave correctly stated the COM
pany's estimate os increases in asset
value, and if it all should work out as
expected, the return is only slightly
better than regular building and loan
saares. uilding and loan associations
are strictly supervised and restricted,
@hile this mortgage company appar-
satiy can make any loan in its discre-
Iion Therefore the purchase of the
snafes il not an investm ent, in our
eplnion, but speculation on the good
.aith, good fortune and ability of it's
0ncers and those who control it by
oVnershp of the common stock, and
We DO MT undertake to estimate how
m ne matter will turn 5ut over a period
o. ten years.