BUSINESS & INVESTMENTS

ANSWERS TO FINANCIAL QUERIES

March 15 1925
BUSINESS & INVESTMENTS

ANSWERS TO FINANCIAL QUERIES

March 15 1925

ANSWERS TO FINANCIAL QUERIES

Question—I would be pleased to have you advise me regarding the value of stock which I hold in the Thoroughbred Silver Black Foxes Limited. I purchased these some years ago, and no dividends have been paid. What are the prospects of this company?—F. M. D., Moncton, N.B.

Answer—The Thoroughbred Silver Black Foxes Limited was started during the boom days. It was highly capitalized, as foxes at that time had a fictitious value, some $20,000 a pair. To-day the

I very best foxes can be purchased for $2,000 a pair, and the business is carried on largely on a fur basis. The company has not been very successful. The men who founded it in the early days had every faith in the proposition and still hold their original stock. Only a small amount was sold to the public. The company has never been able to earn dividends. The prospects do not look bright owing to the fact-of the company being heavily capitalized and on account of the depreciated value of stock. The secret of success in fox raising seems to be good foundation stock, and getting a first-class caretaker who understands animals and scientific feeding. It is true that some highly capitalized companies have been able to pay dividends on their stock, but these are the exception, as many of the fox companies formed some years ago have faded away. The stock of the Thoroughbred Silver Black Foxes Limited, at present, has practically no market. There is little you can do except hold on to the stock you possess in the hope that the company may improve its position.

Question—Can you give me any information regarding the position of Allen's Calgary Theatre? I own some stock but have heard nothing regarding the company for some considerable 1time. Any information you can give me will be greatly appreciated.—C.M.S., Hamilton, Ontario.

' Answer—The assets of Allen’s Calgary Theatre, Limited, were sold under second mortgage foreclosure proceedings about a year and a half ago. The price was $306,000, which amount covered only the first mortgage, taxes, receiver’s certificate and about eighty per cent, of the second mortgage. The stock of the company, both preferred an(d common, is therefore, worthless.

Question—What is your opinion of bonds of the Canada Permanent Mortga.ge Corp.? Would you consider these a good investment for a man who has several Ü ousand dollars invested in Government and Municipal bonds?—C. R. K., Ottawa.

Answer—The bonds of the Canada Permanent Mortgage Corp. are well secured and highly regarded. The company is safe, well managed, and has a strong directorship of well known and reliable men. If you will not require your capital for five years this would make a reasonably good investment.

Question—I would like to know your opinion of the stock of the Canadian U.S. Oil and Refining Corp., also the Kirkland Gull Lake Syndicate, head office, Toronto. —J. A.E., Ottawa.

Answer—Canadian U.S. Oil and Refining Corp. stock is highly speculative. When its prospectus was produced some time ago, the company made big claims regarding its profits and prospects. However, on inquiry these could not be verified. At best, oil shares are speculative. This particular concern has all the earmarks of a stock-selling proposition. The Kirkland Gull Lake Syndicate purchased the Crotean and the Toner claims in Gull Lake area of the Kirkland Lake camp. The properties total 105 acres. The authorized shares in this company are regarded as a fair speculation. The property is favorably situated, being right in line with the main properties of the Kirkland camp. It is a mining prospect.

Question—Would you consider the stock of the Dominion Finance and Guaranty Corp., Toronto, a sound investment? I would appreciate some information regarding this company and the type of business it conducts.-—C. P. M., Kitchener, Ont.

Answer — The Dominion Finance Guaranty Company has been conducting a successful business as a commercial bank for about four years, and has had highly satisfactory results. The company discounts commercial paper and its business is largely in connection with the automobile wholesale trade. In the operation of a company of this kind a great deal depends on the judgment used in the selection of business. The company claims only preferred risks are being accepted. The company holds the note of the automobile purchaser, backed by the dealer and secured by lien on the automobiles. Advances are generally on

!ír b Tvfo °/AW°’Girds the value of the insurance -*•*>& is Protected also by rriodpr" ’ Business is confinea to , Ate-priced utility cars, and the •.cement is made that the great bulk «Í the loans have been on machines used in connection with the owner’s business. The company does not seek loans on the high-priced pleasure vehicles. According to the annual report for the year ended March 31, 1924, the company’s total assets were $328,694. The income during the year was $48,441. Profits for the year, after deducting charges of management, interest charges, etc., was $18,727.48. The profit and loss account stood at $5,270. The company is conservatively managed and has a board of directors of well-known and substantial business men. This can be considered a fair business man’s investment.

Question—My husband, who died recently, owned several shares of the Dryden Paper Company. Where shoula I write regaraing the transfer oj these stocks? What are the prospects for this company? My husband also oivned ten shares of Riordon-, are these entirely worthless? Will you also tell me the address of the Canadian offices of the Brazilian Traction, Light and Power Company.—Mrs. N. C. V., Lacolle, Que.

Answer—The Dryden Paper Company is operating under a receivership which was established in the fall of 1923. Due to the poor market for the products, the mill was shut down for three months during last summer, but it resumed operations in December last and is now running at about half normal capacity. The transfer agents are the Quebec Savings and Trust Company, Montreal. It is reported that a deal for the acquisition of the Riordon Pulp and Paper properties by the International Paper Company is progressing favorably. It is expected that an issue of preferred stock of the International Paper Company will be made. The bulk ot shares will be given in exchange to the present bond holders of the Riordon Company on some such basis as will protect their interest and give them a yield equal to or even better than they are now getting. The original preferred and common stocks were wiped out when the bondholders undertook to sell the properties. The transfer agents of the Riordon Pulp and Paper Company are the Montreal Trust Company, Montreal. The main Canadian office of the Brazilian Traction, Light and Power Company is at 387 Bay Street, Toronto. The transfer agents are the National Trust Company, Toronto and Montreal.

Question—I have $800 in 1937 Dominion of Canada bonds. I see they are quoted at $108.50. Would you consider it wise to sell and invest in French Government six per cent, bonds? They are quoted at $b5 per one thousand franc bond.— —W. H. J., Kingston, Ont.

Answer—The six per cent. French Government bonds are payable both as to interest and principal in France only. In purchasing these bonds the purchaser is speculating on the return of the franc to par. It is possible that people who buy French Government internal bonds at the present time may make fair profits on their holdings some day. A lot depends on the celerity with which Europe is cleaned up, financially and economically. To date the record of investment purchases of European bonds, generally, is a record of loss, and few people have made money. One thing the purchaser of these Fiench Government internal bonds must be certain about is that he is getting them at their real value. Too many of the people who have been selling these bonds in Canada, take advantage of the fact that the average investor does not keep in close contact with the foreign government and foreign markets and consequently ask higher prices for them than the market. For instance, in your letter you state that these French six per cent, bonds are offered to you at $45, while the current quotation on these bonds is around $37. In checking up the price of any European bond the purchaser should remember that not only the franc, the mark, or whatever may be the currency of the moment, is selling at a low rate, but that the bond itself is probably selling far below par in its own country. The prices at which these bonds are usually offered in Canada do not allow for both these

factors and thus they provide an unreasonable profit to the seller. We certainly would not recommend that you exchange your Dominion of Canada bonds for the French Government bonds. You would be exchanging a bond of the highest security for one of doubtful security.

Question—I own some stock of Lake of the Woods Milling Company and would like your opinion regarding this. What progress has the company made during the past year and what do you think are the prospects for this stock appreciating? —M. F. W., Halifax, N.S.

Answer—As a business man’s investment Lake of the Woods Milling is an attractive stock. During 1923 the total output was the largest in the history of the company. Lake of the Woods Milling, along with other companies in the milling group, had a difficult situation to meet during the past two years, due to the rapid fluctuation of the wheat market. In spite of this, it managed to show excellent profits during 1923, the latest report available. The rate per cent, on the common stock was slightly larger despite a larger write-off for depreciation. Brigadier-General F. S. Meighen, president of the company, at the annual meeting, said that the advent of a number of new companies in the milling field heralded an era of closer competition in the milling field. Domestic business during 1923 was fully maintained and export business increased by $150,000 over the previous year. The company has increased its capacity considerably during the past two years. The total number of country elevators now owned by the company is twenty, and these with the large elevators at the company’s mills give a capacity of 5,000,000 bushels.

Question-—What have been the recent developments regarding the Maritime Telegraph and Telephone? I own some stock and would appreciate whatever information you can give me regarding this company. —P. K., Sydney, N.S.

Answer—The Maritime Telegraph and Telephone is a well-seasoned public utility stock. The market, however, is somewhat restricted as compared with some other issues. During 1923 the quietness of business throughout Nova Scotia was responsible for holding back possible developments throughout that year. Nevertheless there was a slight increase in the number of stations and revenue from long distance and local service. The Maritime Telephone Company operates a telephone service in Nova Scotia, and has a close affiliation with the Bell Telephone Company of Canada. It also owns the Eastern Telephone and Telegraph Company, which company owns and operates the telephone system in the neighboring province of Prince Edward Island. The net earnings of the company during 1923 were $402,883, as compared with $380,710 in 1922. The net profits amounted to $249,952, as compared with $241,144 in 1922. The 1924 report is not yet available.

Question—Can you give me any information regarding the Cobalt Provincial mine? I understand that this property has been taken over by another company. —D. E. S., Renfrew, Ont.

Answer—Clifton Consolidated took over the Cobalt Provincial mine some time ago, and is now working the property. The Clifton has been operating at the 170-foot level on Cobalt Provincial while the shaft is being sunk to the 300 and 500 foot levels. The plan is to work two machines on each level. The property is considered a prospect.

Subscribers to MACLEAN’S MAGAZINE desiring advice in regard to Canadian industrial investments, or life insurance problems, will be answered freely. Inquiries should be addressed to the Financial Editor of MACLEAN’S MAGAZINE and a stamped, addressed envelope enclosed.

If you are asking in regard to insurance, please give full details of your own financial and family position, so that definite and individual suggestions can be given.