BUSINESS & INVESTMENTS

ANSWERS TO FINANCE QUERIES

January 15 1924
BUSINESS & INVESTMENTS

ANSWERS TO FINANCE QUERIES

January 15 1924

ANSWERS TO FINANCE QUERIES

Question—In 1914. I purchased, shares in Carriage Factories. As I have had no dividend since 1915 I am wondering if you can give me some information regarding this company.—B. W., Kingston.

Answer—The earning power of Carriage Factories has been greatly diminished. It has gone through a period of stress, when it had to go out of the business of manufacturing carriages and find a new product for its plant. We understand the directors have planned certain things that mean a great deal to the company but at present the outlook is not very clear.

Question—Can you give me any advice regarding Municipal Bankers Corporation bonds? Is this a sound concern?—G. T., Montreal.

' Answer—Municipal Bankers Corpora-

tion buys first mortgages and second mortgages at a discount and places them in a trust fund to secure the bonds it issues. Additional security is provided by the assets of the corporation itself. The bonds are similar in some degrees to the trust certificates which yield to 5z/i per cent, with the exception that the latter would have no second mortgage behind them and would in most cases have larger assets. The Municipal Bankers Corporation seems to be operating on sound lines with good management. The chief objection an investor might find in this issue is that the yield is not as high as on some first mortgage real estate bonds now being offered. The bonds rank somewhere between municipal securities and industrial bonds and can be considered a reliable investment for the average investor.

Question—I am holding some shares of Canadian Farm Implement Company. Can you tell me what this company is doing at present?—P. W., Ottawa.

Answer—According to the directors’ annual report of the Canadian Farm Implement Company, issued in August, 1923, this company is supplying the following implements: Rotary mower,

double sickle mower, stubble burner, weed destroyer, Canadian tractor, grain cleaner, and Wonder grinder. The men behind the project are well regarded and a sales organization is being built up by reliable agents in each district. We have information from reliable sources in Calgary that this concern should be able to produce at reasonable prices quite an amount of machinery peculiarly adapted to conditions of the country. Regarding the auditors’ statement and balance sheet, the president, J. E. Davis, states that while it_ does not warrant paying a dividend, it shows a surplus and tangible assets that should soon put the company on a paying basis.

Question—I am interested in the Bingo Gold Mines slock, and would like your opinion regarding it.—M. L., Winnipeg.

Answer—The Bingo Gold Mine is in Northern. Manitoba, and is an interesting operation, well financed by English people. It is understood that a good mining effort is being put forth. From an official source it is learned that since the new development plant was taken into the property in May, work has been rushed ahead steadily. Assays indicate values to be high. There are several veins on the property all within a distance of 65 feet, and at two points, 200 feet apart. These veins have been crosscut in order to determine their width.

Question —I own some Whalen Pulp and Paper debentures. What, chance is there of these being redeemed at maturity?— N. C., Winnipeg.

Answer As you no doubt are aware, Whalen is in the hands of a receiver, pending refinancing. We are not in a position to advise you regarding the future of your debentures. Recent developments seem to indicate the possibility of a change of control. Other interests may take charge of the company, which might involve the final winding up of its affairs, and the payment of the holders of bonds and debentures. In such a deal the debenture holders might be asked to accept new stock upon a basis that reduce the value of their holdings considerably. All is very indefinite at the present moment.

It has been claimed that there were sufficient assets to take care of the bonds and pay 100 cents on the dollar for the preferred. As the company is in the hands of a receiver the chances of the debentures being redeemed at maturity, and with accrued interest, are remote.

Question—What do you think of Canada Bread Common as an investment? —L. B., London, Ont.

Answer—Canada Bread is splendidly organized and efficiently managed, and has branches in a number of cities in Canada. While no dividend is being paid on the common stock as yet, it is anticipated that there will be something in the way of a distribution within the next year. The market has recently been strong with advancing prices. A statement for the year ending June 30th last showed surplus profits of $711,696, while the common stock outstanding is $2,500,000. Revenue after charging bond interest amounted to $563,618, while preferred dividends took only $87,500.

Question—I am holding some shares of Plenarum. What are the prospects for this property?—S. D., Sudbury.

Answer—The prospects for Plenarum are good. Goldale mines want control of the company to add the property to their mine. McIntyre, whose holdings are on the west, also want it. Each company owns about forty per cent, of the stock and. is bidding for the balance. No matter which company gets the property, it is almost certain to prove a real mine in the future.

Question—I am holding some St. Maurice six and a half per cent, bonds and would be obliged for your opinion regarding this security.—P. G., Montreal.

Answer—The St. Maurice six and a half per cent, bonds are a sound investment. This is not a security that is likely to show much enhancement in value, but as a good investment returning a fair yield it is satisfactory. The earnings of St. Maurice paper for the current year are reported to be running very high. Along with the report that earnings are high comes the information that bank loans have been greatly reduced, the present amount of this item being placed at $300,000, which compares with $1,000,000, at September 31st, 1922. The disposal of the output of the St. Maurice Company is well assured.

Question—I would be very grateful if you would advise me about the following: In 1913 I bought some Canadian Northern Railway, five per cent. Income Charge Convertible Debenture stock, redeemable in 1930. Since 191f.no interest has been paid. Do you know the present value of the stock? —G. R., Ottawa.

Answer—The Canadian Northern

stock of which you speak is junior to all outstanding securities, excepting the common stock of the railroad. This debenture stock is guaranteed by neither the Ontario Government nor the Dominion Government, and interest need only be paid if earned. As you state, no interest has been paid since 1914. While the Dominion Government, which is now operating this railway, will give no assurance as to whether or not they plan to meet the principal at maturity, in view of the fact that it has only six years to run to maturity, we consider that the prospects of the issue being paid off are excellent^ If this security had a long term to run, its value might be held in question in view of the fact that the Dominion Government might see fit at some future date to dispose of the Canadian National Railway. A recent quotation from London Stock exchange was around 55 and 50. This would work out at' about 52 or 52 3d in Canada.

A number of subscribers lately have sent in queries regarding financial and insurance matters and have failed to give full name and address. Anonymous enquiries will not be answered in these columns. To subscribers ivho have sent in such queries if they will repeat their query and accompany this with name and address, answers will be given.

The work of the financial editor will also be lightened if enquirers give the address of the company about which information is desired.