The Washington times., 1930-08-07
TRUSTS TRYING
TOWN PUBLIC
Frankly
BY LESLIE GOULD

An attempt Is Deing mace 70
win back the confidence OF inves-
tors lost in the market break OF
last fall. It is going to be long
row to hoe for the investment
trust manager, but II frank
methods are followed the result
can only be one way success.
: The general public was all
steamed up over investment trusts
last year. In the intervening
months they have had plenty Of
cause to regret their earlier en-
thusiasnl.
Like KIoHdike
There was a mad scramble for
investment trust stocks beginning
last spring and eliminating In
the crash Of stock prices in Octo-
Der and November. Investment
trusts were in q large measure
responsible for the severity OF
the crash.
Stocks of one or two OF the
earlier trusts doubled in value
over night. There was one ex-
treme case of a stock running
from 10 to well above 400. the
investment trust sponsors ana
managers lost no time in convey
ing this news to the public. AS
other trusts were formed, the
sponsors pointed out the fortunes
made in their earlier companies.
The result was inevitable. The
rush to buy resembled the klon-
dixie gold rush. Only for the late
comers there was no gold.
One group had launched two
trusts, had seen the stocks Of
both double In value. and then
decided to get some Of the profit
themselves. They formed a third,
sold the stock to the public, but
the price had been doubled be-
fore the securities were ever
placed on the market. One Of
the earlier trusts had been sold
stock In the new one at just
one-half the price to the public.
The older trust Immediately an
,nounced a profit on its pur-
chaSe-the profit was the differ
ence paid by the public and the
trust for the stock.
Public Scared
This is all ancient history now.
With stocks of most of the trusts
selling below their breakup value
their net worth per share
their sponsors have awakened to
the fact the public Is a little
dubious of their enterprises. They
realize something must be done,
but they are still cropping in the
dark.
Most Of them, though, have
taken steps in the right direction.
They are taking their stockholders
and the public more and more
into their confidence. There is
not the secrecy there was for
merly as to holdings, etc.
One mistake, however, they are
making. That is attempting to
put their. stocks over through
publicity. A certain amount of
publicity is all right, but what is
really needed is some good, sound,
common-sense advertising.
Statements should be prepared
so the average layman can under
stand them. The simpler the
statement the better.
There is only one thing, that
will make the public buy. That
Is to convince them the shares If
q particular company are a bar.
gain. Times have changed since
last year. People are rightfully
demanding to receive tn cir
moneys worth and a little bit
more.
Rights Of Investors
The public should know the
trusts full holdings. price paid
for the stock. current market
value and the breakup value per
share at current market prices of
the securities held and the rela.
ton Of the per share breakup
value to current market prices
for the trusts o m stock.
These are things the investor
has a right to know. On find.
ing the trusts stock Is selling be.
low its real value, the investor
Is tempted to buy. a
In order to make q good show.
ing, some of the trusts are not
presenting the true picture Of
the market value Of securities
held. A few are Still inclined to
figure these on the prices pre-
vailing before q market break.
AS an example, few companies
In July gave out statements based
on May 81 market prices. The
management might just as well
have put out a statement based
On last September'S prices, as far
as presenting q true picture Of
their company's position. Since
May 81 there has been very
sharp revision downward in stock
market prices. Current prices are
well below the levels of May 81
Trusts that play fair with the
public will be the ones that
prosper.
Trust Idea Excellent
The idea behind investment
trusts is excellent. In the past
only the rich could have diversity
in investment. The investment
trust Is supposed to extend that
opportunity to the little fellow.
For q few dollars through the In.
veStment truss the individual can
share an equity in the leading
corporation Of America.
With q thousand dollars the
average individual can only buy
cfv shorae ~ TT @ ckao1 -, St.