Knockdown

Just as "investment trust buying" was a potent pushup factor in 1929, "investment trust selling" has been a big knock-down factor in many a stock recently. Last week Tri-Continental Corp., investment trust sponsored by J. & W. Seligman & Co., issued its third quarter report--one of the first major trusts to do so. At the same time Selected Industries, Inc., Tri-Continental supervised, published its showing. The investments of Tri-Continental Corp. had, on Sept. 30, a market value of 29 millions against a cost of 51 millions. The common stock had a book value of $2.84 against the $8.70 of June 30.* Stocks sold by the two trusts during the quarter included:

7,000 American Can

7,500 American Telephone

16,100 General Motors

45,400 Chesapeake & Ohio

8,805 Electric Bond & Share

7,200 Air Reduction 14,400 Union Carbide 17,500 United Corp.

8,000 Curtis Publishing

14,724 Studebaker

10,000 Servel

3,700 United States Steel

5,000 Southern Pacific

New purchases by Tri-Continental were confined almost exclusively to bonds and preferred stocks. Sold early in the quarter were the corporation's big foreign investments, largely in Germany.

*A big factor in the sharpness of the decline was "leverage." If an investment trust has, for example, $40,000,000 preferred stock outstanding, 1,000,000 shares of common, and assets of $50,000.000, the common has a book value of $10 a share. If the assets increase 10% to $55,000,000, the book value of the common jumps, by "leverage," 50% to $15. In Wall Street, stocks with large leverage are spoken of as "having a kick to them."

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