MutualFundWire.com: Odd Lots, May 25, 1999

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Tuesday, May 25, 1999

Odd Lots, May 25, 1999

Gabelli's $50 million payday whacks earnings
From The Wall Street Journal -- registration needed
Is Gabelli Asset Management in the red or in the black? You are excused if you are confused. When Gabelli released its earnings it trumpeted a pro forma bottom line of $9.3 million, or 31 cents per share. Yet its SEC filings reveal a GAAP loss of $21.6 million, or 72 cents per share. It turns out that the difference is Mario Gabelli's pay. The company took a $30.9 million charge to reflect the present value of a $50 million lump sum the company will pay Gabelli in 2002.

SEC steps closer to new trading rules for fund staff
From The Wall Street Journal -- registration needed
The SECs limits on fund managers trading may be more severe than people thought. The paper reports that the SEC may even limit, or ban, fund staff trading in private placements and IPOs. Also included in the changes are more disclosure and tracking of manager's personal investments. The changes may not be radical for all firms -- 72% of fund companies already ban trading in IPOs. "I don't think 'the new rules' will be controversial, except to a few people," James Riepe, vice chairman of T. Rowe Price Associates, told the paper. When managers trade for their own accounts, "the conflict is so clear, I can't help but think the vast majority [of] people will be fine" with the proposals.

Don't worry, keep smiling
From American Banker -- subscription needed
"When you talk to the competitors, they're all doing great," Jeremiah Potts, the head of marketing at Massachusetts Financial Services, told the paper. "But the numbers are the numbers." So who is hurting? The paper pointed out that investors invested only $42 billion in the first quarter -- half of the amount from a year ago. One reason why no one attending last week's ICI meeting is that they do not consider this a long-term issue. Putnam's William Schielber is quoted stating that the current atmosphere is probably a cycle.

Social Security windfall for funds?
From The NY Post
Beth Piskora writes that the fund industry is lobbying to take control of Social Security through the introduction of private accounts. She writes that fund executives are looking to Social Security to refill their coffers as individual investors turn to buying stocks in their brokerage accounts. Among the downsides: even Fidelity only has two-thirds of the accounts needed to when Social Security is privatized.

Funds in the Press

Legg Mason Value Trust (LMVTX), Fasciano (FASCX), Invesco Blue Chip Growth (FLRFX)and Eclipse Small Cap Value (EEQFX) are four funds for $50 dollar investments, says Smart Money.