New investment program targets 'affinity' groups

October 16, 1991|By Michael Pollick

Imagine that the management of the Boston Celtics L.P. wanted to make their shares less volatile by seeking the most loyal, long-term shareholders they could. Who better to ask than their season ticket holders?

That's the kind of "affinity group" stock offer that could be made through a new Security Trust program, said Jesse Sternberger, vice president and director of marketing for the subsidiary of the Baltimore-based bank holding company MNC Financial Inc.

Called "the Affinity Investment Program," the new Security Trust venture will help companies "identify affinity groups, then promote stock with their group," Mr. Sternberger said.

The concept is similar to that of a dividend reinvestment and stock purchase plan. In some cases, a company might send out a mailing to existing shareholders or to employees.

What makes it different is the concept of inviting as potential investors people in affiliated businesses that the corporation thinks would make good shareholders and letting them make their first stock purchase through the plan.

Typically, a dividend reinvestment and stock purchase plan requires that an investor already own stock in the corporation before he or she is allowed to enter the plan.

In the case of the Affinity plan, Security First has gone through additional regulatory hurdles so a potential investor could make a first stock purchase directly through the trust, avoiding entirely the need to go through a stockbroker.

So far, the trust has not signed up any corporations for the new service, but trust officers already are making their second visits to a number of companies that are interested, according to Dean T. Fisher, senior vice president.

Other examples of how affinity stock targeting might work, based on a list provided by Security Trust: An electric utility might send an invitation to buy stock along with its electric bill to all its customers. A stock-issuing health maintenance organization might target its doctors and nurses.

For starters, Mr. Fisher said, the company is canvassing the 120 corporations for which it now acts as a stock transfer agent.

Security Trust, while a less visible part of MNC Financial than its Maryland National Bank branches, is huge in its own right, handling $30 billion in assets. The stock transfer business is part of a diversified mix of services that includes running investment funds, setting up employee benefit plans and handling individual trust accounts.

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