Now is not the best time to sell Manufacturers Hanover stocks

Andrew Leckey

December 18, 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 $23 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. awhile 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.

Q. I file my business and personal returns electronically and this 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 income 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. Since 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.

The last market for the stock was in April of 1988, when it was being offered at 25 cents a share with no bids, according to Robert D. Fisher, vice president of the New York-based R.M. Smythe & Co. stock-search firm.

Q. I have been left 3,000 shares of Cubic Corp. Should I keep them for appreciation or sell them?

A. Hold your shares of Cubic Corp. (around $19, American Stock Exchange), a company deriving about half of its sales from the military, because they have solid appreciation prospects over the next few years, advised Richard Wholey of Chicago-based Wayne Hummer & Co.

The firm's main defense-related businesses are flight-training simulators and surveillance equipment. It also makes elevators and fare collection systems.

"The stocks of all defense-related companies are trading well below previous peaks, although Operation Desert Storm has given them a boost of late," said Wholey. "Even though Cubic Corp.'s earnings are expected to be below last year's excellent showing, the stock price seems low in relation to earnings."

Q. I purchased 200 shares of Basic American Medical Inc. at $5.75 a share. The price has taken a lot of ups and downs. I'm confused. Should I hold or sell?

A. Basically, you should hold on only if you're willing to accept some bouncing around.

Shares of Basic American Medical Inc. (around $7, over the counter) have been volatile because of rumors of a possible sale of this operator of acute care hospitals, out-patient surgical centers and long-term care facilities, said Sharon Conway, A.G. Edwards & Sons Inc.

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