Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.wpost From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Dominion Resources Finds It Has a Powerful Mutual Fund=By Stan Date: Mon, 2 Nov 92 04:35:15 EST Message-ID: <44.1992Nov2.043515@AmeriCast.com> Dominion Resources Finds It Has a Powerful Mutual Fund=By Stan Hinden=Washington Post Staff Writer= Power to the People? Nope, just the other way around. Power from the people! Megawatts of power - in the form of millions of dol- lars - being pumped into a Virginia power company. And not to pay electric bills but to buy shares in a new mutual fund called "America's Utility Fund." The power company, in this case, is Dominion Resources Inc., of Richmond, the parent of Virginia Power Co. These are the folks who light up the lives of many Virginia residents. Dominion has a financial services subsidiary, known as Dominion Capital Inc., whose goal is to make money for the power company by its invest- ment activities. It has been almost six months since Dominion announced it would create a mutual fund that invests in utility stocks. It got a lot of attention because Dominion was the first utility in the nation to do so. Eventually, however, it was time to go back to O.J. Peterson III, the chief financial officer, and ask, "Was anybody interested?" Peterson was glad to report that the fund has attracted $27 mil- lion from customers and other investors - well beyond the $20 million he was hoping for this year. Dominion has added $10 mil- lion of its own money so the fund now has $37 million invested in 40 electric utility and five telephone stocks. Dominion's timing, it appears, was impeccable. Six-month bank certificates of deposit now yield 3.2 percent. But savers want more. And one place to get better returns is in utility funds - where the dividend yields stand at about 5 percent to 6 percent. The proof of growing investor enthusiasm for utilities is that in 1986 there were seven funds, with $1.9 billion. Today, there are 35 funds with $13.1 billion. One of the newest, of course, is America's Utility Fund. The in- vestments for the fund are being handled by Lord Abbett & Co. of New York. The fund's managers started off well. During the third quarter - July, August and September - America's Utility Fund gained a total of 7.1 percent, the second-best showing among 35 funds, according to Lipper Analytical Services Inc. When Dominion offered the fund to its 1.8 million customers, it gave them two options. The first was a single payment with a $1,000 minimum. The second was a monthly installment plan, with a minimum payment of $20 a month. As it turned out, Peterson said, most of the people who signed up for the fund used the monthly installment plan but half of the money has come from lump sum payments. Peterson is now trying to persuade other utilities to ask their customers to invest in the fund. Like Dominion, some of these utilities already have plans that let customers buy company stock. The utilities are worried, Peterson said, that customers might switch from buying stock to buying shares in the fund. Peterson said he will be able to tell the utilities not to worry because Dominion's stock purchases went up 22 percent. He said the mutual fund sale seems to have stimulated interest in Dominion's stock. Originally, Peterson said, the fund had to attract $200 million to make a profit on the operation; now he thinks $100 million will be enough. The fund has no sales charges but will carry yearly management and administrative fees of from 1 percent to 1.21 percent. The fund can be reached at 1-800-487-3863. At Radiation Systems Inc., Richard E. Thomas wears three hats: chairman, president and chief executive. But early next year, Thomas said, he expects to give up the hat marked president and hand it to one of his top executives. Thomas, 66, told share- holders in his recent annual message, "I don't have to be remind- ed that time moves on. Succession planning has been a high prior- ity for me and your board of directors for several years." Meanwhile, Thomas said, the business climate is getting ever more competitive for the Sterling-based company, which builds a wide variety of antenna and communications systems - both civili- an and military. "We walked away from certain large but low- margin and high-risk new business opportunities" that would have "adversely affected our profitability," Thomas wrote. Radiation Systems showed good gains for the fiscal year, which ended June 30. Sales ($127 million) were up 10 percent while earnings ($10.5 million) were up 26 percent. But bookings of new orders were down 41 percent and the backlog of unfilled orders was down 15 percent. For its first quarter, which closed Sept. 30, the company re- ported a 4 percent drop in sales but an 8 percent gain in pro- fit because of operating efficiencies. Despite Radiation Systems's strong earnings, Thomas complained, his stock has lagged. During the past 52 weeks, the stock (sym- bol: RADS) has sold at between $9.375 and $20. It closed Friday at $11.75 and although the company has been doing dog-and-pony shows in the investment community, it hasn't helped much. The stock is depressed for two reasons, said Guy P. Chance, research director at Scott & Stringfellow Inc. in Richmond. "The company is perceived as a government contractor and while most of its business is not military, it is tarred with the same brush as companies in the defense group." Moreover, he said, Radiation Systems is also perceived as a secondary technology stock - a group that currently is out of favor. As a result, Chance said, the stock is not trading at the level that it deserves on the basis of its earnings. Indeed, the stock is trading at less than nine times earnings compared with 25 times earnings for the broad market. Down the line, Chance said, the stock will get more respect from investors - especially because the firm has passed an important threshold in its life by getting ever-larger contracts and by evolving into a provider of completed systems. The Washington area has a new public company in Southern Starr Broadcasting Group Inc., which recently moved its headquarters from Winter Park, Fla., to Alexandria. The company owns radio stations in Little Rock, Ark., Biloxi, Miss., New Haven, Conn. and Daytona Beach, Fla. The head of Southern Starr is Robert E. Long, a familiar figure on the Washington investing scene. He was a co-founder of the company in 1983 and has been serving as chairman. When the company's president, Peter H. Starr, died unexpectedly in 1991, Long also became chief executive. Long, a former president of Potomac Asset Management Inc. of Washington, also has served on several local boards, including Insituform East Inc. of Landover. Southern Starr, which was ori- ginally financed by money raised in the Washington area, still has many local shareholders. Long estimates that 75 percent of the company's 350 shareholders are area residents. Besides Long, two of the firm's other five directors are local residents. They are George D. Crowley Jr. of Chevy Chase, head of Crowley Cellu- lar Telecommunications; and Robert P. Linn of Potomac, a managing director of Ferris, Baker Watts. Southern Starr, which has 1.3 million shares outstanding, trades in the Nasdaq Stock Market under the symbol "SSBG." It is listed in the second Nasdaq tier. The company, which values its stations at $25 million, had reve- nues of $6.8 million and profit of $243,000 (19 cents a share) in fiscal 1992, ending March 31. The folks at Jefferson Savings and Loan Association in Warrenton. are celebrating the sale of $6.8 million worth of stock. The thrift needed at least $6 million to make the offering a success. The sale was handled by Potomac Securities Inc. Thomas W. Winfree, president of Jefferson, said the infusion of new money means the S&L will meet all of the current federal rules for the capital the thrift must have on its books. And even though those rules will get tougher on Jan. 1, Winfree said, he did not anticipate that Jefferson would have any problem meeting them. Jefferson shares, which were sold at $2 each, are listed in the "pink sheets," the daily list of stocks that are not traded on formal exchanges. Jefferson, which has six branches from Char- lottesville to Leesburg, has assets of $312 million. The S&L, which concentrates on home mortgages, has reported eight consecu- tive profitable quarters, Winfree noted. He also said he was beginning to see a slight pickup in the pur- chases of new homes or resales. Recently, the thrift has been busy refinancing older mortgages.endquad 02:38 11-02C9999----- Copyright 1992, The Washington Post. This story is from the Washington Post's Capitol Edition On-Line and is not to be ar- chived or redistributed. For more information, send-email to American Cybercasting Cor- poration (usa@AmeriCast.COM)