Hang on to Manufacturers Hanover stock until price rises

Leckey Q&A

February 13, 1991|By Andrew Leckey

Q. Every time I look at my shares of Manufacturers Hanover they keep sliding. I bought them in 1988. Is it time to bail out?

A. Bank on taking a bath if you unload your shares any time soon.

Because those shares of Manufacturers Hanover (around $25 a share, New York Stock Exchange) have dropped more than 50 percent in value since 1988, this is definitely not a time to be a seller, advised George Salem, analyst with Prudential-Bache Securities. Hold on until somewhere down the road the economic outlook is somewhat better and the stock price higher, he said.

"While the economy has taken its toll on the bank and its stocks, you must realize that the problems in its portfolio did not just appear in recent months," said Salem. "The bank's loss provision is well over $300 million."

Manufacturers Hanover's fourth-quarter net loss was $67 million, due primarily to loss provisions for its participation in leveraged buyouts that went bust and faulty real estate loans.

Q. I was told to sell my 300 shares of Travelers Corp. a while ago but I didn't listen. Is it too late to sell this weak performer?

A. It's time to travel on.

Sell your shares of Travelers Corp. (around $19, NYSE), the multiple-line insurance company, because its asset quality is rather questionable, said Michael Lewis, analyst with Dean Witter Reynolds.

The company has been under a strain due to its mortgage portfolio and poor real estate investments. In addition, it was one of the institutional holders of Bank of New England bonds, which are virtually worthless following the federal regulatory takeover of the bank, Lewis noted.

"Compounding this negative scenario is the property-casualty business, which won't help the company either," Lewis concluded. "Finishing off the picture, the slow economy won't be providing any help for a while."

Q. My brother-in-law is recommending the stock of ConAgra Inc Do you agree with this purchase recommendation?

A. You aren't being conned with that recommendation.

Buy shares of ConAgra Inc. (around $39, NYSE), the maker of bakery flour, feeds and poultry, for this company is likely to increase its earnings by 15 percent in 1991 despite a slow economy, said Roger Spencer, analyst with PaineWebber Inc.

"Its Beatrice acquisition has contributed very nicely to this excellent company, and the positive earnings scenario is reflective of this," said Spencer.

Q. I file my business and personal returns electronically and thi is starting to be a costly venture for my small income. Can I deduct these costs from my personal and corporate return?

A. Yes, the cost of having someone prepare and file your incom tax return is a deductible expense for your business, or an itemized deduction on Schedule A of your personal tax return, said James Schlesser, tax partner with Deloitte & Touche.

Q. I bought 2,000 shares of Asbestos Away U.S.A. in 1988. Sinc then I have not heard anything from the company and all of my efforts seem to go nowhere. Can you help me?

A. It didn't go completely away.

Asbestos Away U.S.A., an asbestos removal business incorporated in Nevada, is still in existence at 2100 Constitution Ave., Sarasota, Fla. 34231. However, the company's stock has an inactive status and is no longer traded in the over-the-counter market.

Andrew Leckey answers questions only through his column. Address such inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611.

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