Q: We made a large investment through...
Q: We made a large investment through a well-known brokerage a few months ago. Our consultant then decided to team up with a much smaller firm to get away from the regulations and serve his clients better.
How can we find out about this smaller firm? We tried calling the Better Business Bureau, but were told there’s no listing on the firm and that the agency hasn’t heard any complaint. The BBB told me to contact the Securities and Exchange Commission in Washington. But the SEC told me that it’s are not allowed to give out confidential information. Please help. -- Monterey Park
A: Your letter is a little confusing since it is unclear whether the “smaller” firm that you are trying to investigate is a brokerage or simply a private financial consulting service. And does your consultant have a brokers license, or does he simply call himself an adviser? If you are trying to check out a stockbroker or a brokerage, write to the National Assn. of Securities Dealers, Public Disclosure Program, P.O. Box 9401, Gaithersburg, Md. 20898.
But if this guy is just a financial adviser (and doesn’t have a broker’s license), you might be able to check him out through the International Assn. for Financial Planning, 2 Concourse Parkway, Suite 800, Atlanta, Ga., 30328. It has more than 15,000 members across the country and investigates (and keeps record of) complaints.
If your financial adviser told you he was leaving his old brokerage to get away from the regulations, I would ask him precisely which regulations he is running away from. Then I would ask either the NASD or the IAFP whether it is ethical and prudent for him to dodge those regulations. Make sure he isn’t avoiding regulations that are designed to protect you, the investor.
Q: purchased 5,000 shares of Navistar International common stock at $7.375 a share before the 1987 crash. The stock is trading around $2 a share and is paying no dividend. What does Wall Street think of this company’s future? -- Bath, Pa.
A: The truth is that Wall Street isn’t paying much attention to Navistar these days. The stock has been stuck between $2 and $4 a share for more than a year, and this manufacturer of heavy-duty diesel trucks and parts just isn’t generating a lot of excitement on Wall Street.
Navistar’s profits are being hurt by two factors: the oil crisis and the nation’s economic slowdown. The consensus among analysts is that Navistar will lose four cents a share in the current year, according to the Institutional Brokers Estimate System. Through July, the company had lost a dime a share. In 1989, the company had a profit of 23 cents a share.
Larry D. Hollis, the analyst at Milwaukee’s Robert W. Baird & Co., says that despite all Navistar’s problems he “basically” has a recommendation that clients buy this stock now that it is selling at $2. Although Hollis thinks that in the near term Navistar won’t do any better--or worse--than the stock market as a whole, he believes that the truck maker could roar ahead of the pack in the long term.
Once the nation’s economy picks up, says Hollis, industrial production will improve from the lousy levels of the past year. And Navistar’s products will be more in demand.
Truckers are also suffering from the effects of higher fuel costs. And because of environmental safeguards, today’s new trucks aren’t getting enough extra miles per gallon to justify going out and buying a new rig.
Q: My father left me a stock certificate for Black Tiger Copper Mining Co. The Secretary of State in Wyoming, where the firm was, had nothing on the company. Does this stock have any value? -- Venice, Fla.
A: According to R. M. Smythe & Co., which tracks down old stock certificates, Black Tiger was located in Grand Encampment, Wyo. The company, however, broke camp and went out of business in 1927. The stock is worthless, Smythe says.
