<OT> Tracking stocks - what about spinoffs?
Article from the NY Times:
nytimes.com
<<Shaping a Spinoff
By RICHARD A. OPPEL JR.
o one disputes that Kansas City Southern Industries' most valuable
asset is the Janus Capital Corp. The question is, what will the
company do with it?
The railroad operator wants to spin off Janus as a publicly traded
company, combining it later this year with the Kansas City Southern
subsidiaries Berger Associates and Nelson Money Managers, as well as
a 32 percent stake in DST Systems, to form Stilwell Financial.
But Janus officials prefer for Janus to be spun off by itself, arguing that
the market would place a higher valuation on the stand-alone company's
shares. An independent Janus, they add, would also let them offer stock
options as incentives to fund managers and analysts -- helping it hire and
retain talented people -- and would insure that its huge cash flow goes
toward its expansion.
If Janus isn't spun off by itself, will any fund managers bolt? No, said
Thomas Bailey, the chairman of Janus.
The situation should be of interest to Janus fund shareholders, who have
been among the lucky few to beat the broad market indexes in recent
years. According to Kanon Bloch Carre, the mutual fund consulting firm
in Boston, Janus' diversified stock funds have scored the highest
asset-weighted returns of the 10 largest fund companies for two years
running.
Though the managers strongly prefer their plan to the company's, no one
has raised the possibility of leaving if they do not win, Bailey said. "We
can make either structure work, but to us unquestionably the best
structure is to have Janus as a stand-alone operating company," he said,
adding that Janus officials presented their plan to the Kansas City
Southern board last month and were told that it would be taken under
advisement.
A spokesman for Kansas City Southern, Bill Galligan, said the full
Stilwell Financial spinoff was on track. It received approval this month
from the Internal Revenue Service to be tax-free to shareholders.
"We're proceeding with the plan as is," he said, adding that "if something
comes up better or even as good, I think our board of directors would
have to look at it."
Rating Fidelity Managers
Think Fidelity and you may think Peter Lynch. Or Bob Stansky.
You probably don't think Kenichi Mizushita. But maybe you should.
Jim Lowell, the longtime watcher of Fidelity Investments, rates Mizushita,
manager of Fidelity's Japan Small Companies fund, the top Fidelity
manager in his latest report on the company. Sure, Mizushita's great
recent returns have been driven by a turnaround in Japanese stocks. But
when the Japanese market was down, his fund didn't fall as far, Lowell
noted. And this year, Mizushita was up 114.9 percent though Thursday,
compared with 35.5 percent for the MSCI Japan Small Cap index.
Lowell, editor of the Fidelity Investor newsletter, which is not affiliated
with the fund company, considers the risk-adjusted returns of each
manager compared with those of what he considers their appropriate
benchmarks.
Among managers of diversified Fidelity funds, Lowell ranks Neal Miller
of New Millennium No. 1, followed by Erin Sullivan of Aggressive
Growth, Charles Mangum of Dividend Growth, Harry Lange of Capital
Appreciation, and Stansky, of the $100 billion Magellan fund.
In spite of the rankings, which are 'front weighted" and thus give an edge
to recent performance, Lowell considers Mangum the best diversified
manager at Fidelity. While some other top Fidelity managers are "very
aggressive, with concentrated portfolios," he said, Mangum is "much
more diversified and risk-conscious."
Dot-Com Products at Instinet
The Instinet Corp., the Reuters Group unit that operates the world's
biggest private electronic trading network for institutional investors, plans
to offer stock trading, mutual funds and retirement accounts through a
new brokerage firm called the Instinet.com Corp.
The moves are among several planned by Instinet to offer new financial
products and services including credit cards, mortgages and
company-specific research, according to company filings with the
Securities and Exchange Commission.
Instinet's primary business has been its trading system, which lets
brokerage firms and big institutions buy and sell stocks anonymously.
Although it now handles about 20 percent of trading in NASDAQ
stocks, competition from rivals like Archipelago and Island ECN appears
to be pushing Instinet to look for new business opportunities.
Instinet officials declined to elaborate on their plans. Instinet.com's name
suggests, though, that the company plans to provide brokerage and
financial services over the Internet.
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