Walter, John & John.. IG news!!
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Details Emerge About Mysterious Investment Firm IG Holdings
November 06, 1998 10:35 AM
NEW YORK -(Dow Jones)- A clearer picture is beginning to emerge about IG Holdings Inc., a secretive investment firm whose low-ball bids for thinly traded stocks have raised the dander of the targeted companies.
The Phoenix-based company is owned by Ira Gaines, an investor who made money in the late 1980s by buying portions of limited partnerships at deep discounts, according to Bret Jordan, an analyst at Advest Inc.
In an interview with Dow Jones Thursday, Gaines said his 15-year-old firm "operates from a viewpoint of discount to value," adding that "we are searching seven days a week for stocks that trade at a discount to intrinsic value."
An associate of Gaines who didn't give his name described the firm as a small, privately held investment group that specializes in thinly traded stocks and bonds and limited partnerships. "We shun publicity and do not divulge our strategy or purpose." he said.
The firm considers itself "a cushion of support in tough economic times," Gaines's associate said. He wouldn't comment on the firm's practice of not contacting a target company's management before bidding for stock or its success rate. "In a down market, we do fine, in an up market not as good." He declined to comment on the size of the firm and specific holdings. He also wouldn't name any future targets other than to say "there are a lot out there."
Gaines's unusual methods have been confusing to shareholders and baffling to the companies. IG Holdings has offered to buy between 2% and 4.9% of the companies it searches out, generally at prices 25% to 33% below the current market price. Most of the targets are illiquid, small companies with tangible assets, Jordan said.
Jordan speculated that IG Holdings may be hoping that troubled investors in need of cash will be willing to sell their stock. "It is not impossible that he would find investors who would want to do this and suffer a dramatic loss," Jordan said. "He will probably receive relatively few responses, but even if he gets a few, it will mean a profit for him."
Among the companies targeted by IG Holdings in recent months are Providence & Worcester Railroad Co. (PWX), Friendly Ice Cream Corp. (FRND), Jameson Inns (JAMS), Greyhound Lines Inc. (BUS), Metromedia International Group (MMG), InnSuites Hospitality Trust (IHT), Spiegel Inc. (SPGLA), AeroCentury Corp. (ACY), Station Casinos Inc. (STN), Universal American Financial Corp. (UHCO), T.J.T. Inc. (AXLE), American Residential Investment Trust Inc. (INV), Thackeray Corp. (THK) and Aegis Realty Inc. (AER).
Many companies, bewildered by the offers, issued news releases urging shareholders not to tender shares. Since the tender offers began, several executives said they tried and failed to learn more about IG, its motives and its strategy.
"We don't know if it's illegal, but we think it's certainly unethical," Craig Kitchin, president of Atlanta-based Jameson Inns, said earlier this week. Clay Strittmatter, vice president of finance at American Residential Investment Trust Inc. said his firm was "flooded with calls." Strittmatter said some investors feared the company was selling itself at a substantial discount.
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