New-York tribune., 1922-04-17
Common Stock az Investment

Question: have been o daily ana ap-
unln for several years. 1t is tho only
renson why am regular purchaser OF
rHss Tribune Your frank reply TO the
lcIoWtng would be gratefully appreciated,
Would you consider advisable perma-
nent investment the purchase OF the new
on when issued basis Mt 72? / am fully
aware that common stocks. except In
nnnaual .i cases. cannot be regarded as
| "inVeetments.' but | have been wondering
whether this was one OF the unusual cases
in vl"w OF the past earnings OF the
stock at prices ranging from lol 20 10S.
ana this / suppose, can be regarded as an
Investment, although have neve, seen
ferrcd stocks which you no frequently rec.
omnend My thought was TO dispose OF
the preferred and purchase the new com
mon. but | should be grateful for your
opinion Please give me your opinion as
10 contemplated purchase or Singer Soy
ing Machine common, now quoted around
09Y / am not man OF 1uc8ns. but de-
pendent entirely on my salary and am try
year so that when reach u retiring aRs
need have no financial worries.~-L. q, w.
Answer~-We consider Eastman Ko-
dak common stock an investment with
speculative possibilities, but there are
many things to be considered before
switching from the preferred to the
common. In the first place. the pre-
ferred gives an income Of approx
mately 81 per cent at 105. In selling
the preferred and purchasing the new
common you would be exchanging q
OF per cent stock for one returning
slightly less than 5 per cent, figuring
on the basis Of the 80 per cent paid
last year and continuance Of divi
dends of the same proportionate size
on the new common. Even if an extra
dividend at the rate of 80 per cent,
III addition to a regular 10 per cent
rate, were a certainty, you would not
be getting 81 per cent return on
common stock bought at 70. OF course,
there is always the possibility of
higher rate being paid on the common
stock, especially with the par value
reduced to the point where the stock
may easily become popular one.
comes in. 1t is an element of doubt
which prompts US to hesitate about
advising you to make the exchange.
However, we think that a person in
your circumstances is entitled to a
greater rate of income than you are
receiving. We rarely recommend the
preferred stock because the issue is
small and it is so closely held that
investors often are compelled to wait
long time before they can make an
advantageous purchase. Why not look
offer greater return without unreason-
able risk? American Ice preferred,
paving the same rate as Eastman Ko-
dak, IS selling around 81 and it is pro-
tected BY wide margin Of earnings.
The Singer stock you refer to is that
of the Singer Manufacturing Company.
This company and the Eastman ko-
dak Company have much in comm on
as far as their history and financial
standing are concerned. One material
difference is that the Singer concern
declared huge stock dividends fre-
quently and thus gave stockholders a
face value Of stock commensurate with
che value of the propery and its bust
ness 1t may we'll be that further stock
dividends will be declared, but at the
moment the stock is 5 per cent issue
selling close to 100-not an attractive
investment unless there is some as
surance of an increase in the rate.