Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-05
FLOATING SUPPLY
OF STOCKS SMALL
Popular Shares Are Being
Steadily Accumulated by
Fixed Trust interests.
BY CHARLES F. sPEARE.

DA ShAhLES r. SREAhE.
Special Dispatch to The star
NEW YORK, February 5.-That the
floating supply of q dozen to 20 prorni-
nent industrial, public utility and rail-
road stocks is being steadily reduced
through purchases by fixed trusts is be-
coming daily apparent.
Something of the same situation de.
veloped in 1929. when the management
trusts and the trading corporations
concentrated their buying power on the
blue chip" issues and bid against each
other for them, with the result that
they sold at greatly exaggerated prices.
Holdings Are Large.
The portfolios Of the 100 or more
fixed trusts that are now In operation,
Of which probably a score represent the
major part Of the s40o, o0O, 900 to $780,
100000 publicly invested In them, look
much alike. They include the most
representative members of the three
major groups of stocks and together are
regarded as the most satisfactory cross
section Of the general market list They
have been selected on their record for
earnings and dividends and for the pos
sibnitieS that each individual issue holds
out for future appreciation.
The trusts of the fixed type are being
organized daily. Several have come
into notice recently that are sponsored
by prominent New York Stock Ex-
change houses and by investment firms.
They have been set up in response TO q
public demand for an investment at q
comparatively low unit price which has
diversified character and Is supposed
to represent the best judgment OF the
directors with respect to stability Of
price. and continuance of dividends.
The feeling Is that the fixed trusts viii
be popular so long as markets are in
their present unsettled state. With o
return to something like normal condi-
tions, the public may be expected to
make its own selection of individual
stocks and try to get the most of them.
rather than restrict It's investment to
q composite list.
Character Of Holdings.
Recently compilation has been made
by a Stock Exchange house of the
holdings Of group of 80 general man
agement and fixed trusts. This shows
the degrees to which purchases have
been concentrated in a select list Of
much greater amounts have been placed
in specific issues by fixed trusts and by
those of the management type.
For instance, fixed trusts hold about
10000 shares Of Atchison Railroad COM
mon, compared with 10000 shares in a
comparative list of general manage
ment trusts and nearly $1,000 Of Ca
madam Pacific, with none shown in the
other trusts whose portfolios have been
examined. Blocks Of 81 900 shares OF
Illinois Central and Louisville 81 Nash
vile are also in the fixed trusts, with
none in the management trusts. The
holdings of New York Central by the
fixed trusts are more than double those
in the management trusts. The same Is
true Of Pennsylvania shares, which
amount to $4,000 in one case and 10000
in the other. In Southern PACING ana
Union Pacific the total holdings OF the
fixed trusts are about 10000 shares,
compared with $4,000 shares IN the gem
eral management trusts.
The differences seem to be smaller IN
the public utilities than in the railroad
list. General mana cement trusts hold
over 1875, 900 shares of Commonwealth
& Southern common against $4,000
shares by the fixed trusts. On the other
hand, the fixed trusts have about 5000
shares more of Consolidated Gas of New
York than the management trusts.
They hold over 105 900 shares of Gem
eral Electric against $4,000 shares by
management trusts, and nearly $4,000
shares of North American Co. stock. or
nearly 10 times as much as that by the
older companies. United Gas Improves
ment stock Is listed at over $4,000
shares by the fixed trusts, with appare
emily none shown in the portfolios OF
MANAGEMENT trusts analyZed. PrOmi-
nent industrialS like Steel common are
four times larger in fixed trusts than
in the management trusts. In West
inghouse Electric, the figures are g. 68
shares for the fixed trusts and $4,000
for the management trusts and in Wool
worth 81, 403 shares against 81, 900.
Common Stocks Popular.
The portfolios of the fixed trusts are
nearly all composed of common stocks.
Investments in preferred stocks and in
bonds are insignificant and rare. The
effort Of the arrangements of the newer
fixed trusts has been in two directions,
first to take advantage of the present
low prices of stocks and either to limit
the portfolio to shares of low price or
to provide for liquidation Of the trust
within a few years, and second, to re-
duce the so-called load" which the
purchaser of unit shares had to absorb,
and which In numerous instances is
said to be from 8 to 10 per cent, and has
been known to be much higher.