Nextlink Ipo Among Those Fidelity Sold Out
Fidelity Investments says heavy demand for stock in public offerings it sells through an alliance with Salomon Brothers Inc. is preventing some customers from buying shares.
Fidelity, which runs the second-biggest U.S. discount brokerage company, formed an alliance with Salomon in January that allows Fidelity’s customers to buy as much as 10 percent of the shares of IPOs that Salomon arranges.
The problem has kept some Fidelity customers from profiting on a surge in initial stock sales.
Fidelity customers have had access to about 10 IPOs, including the recent stock sale of Nextlink Communications Inc.
Nextlink is a telecommunications company founded by Craig McCaw, who’s known for building McCaw Cellular Communications into the largest U.S. cellular provider before selling it to AT&T Corp. for about $11.5 billion.
The demand for Nextlink was so high that Fidelity customers could have paid for the entire $258.4 million IPO.
Nextlink’s stock rose 37 percent to $23.25 in its first day of trading, meaning any Fidelity customer who wasn’t able to buy shares in the IPO missed out on a fast profit.
Dividend growth good indicator
Are you looking for a good investment?
“Stocks with strong dividend growth outperform other stocks,” says adviser Charles Babin.
He explains, “Companies raise dividends when the future looks bright, but cut payouts when they expect rough times. Best strategy is to focus on dividend growth, not yield.”
Companies that boosted at least 10 percent a year over 10 years include Merck, Johnson & Johnson and Travelers Group.
Insiders buying stock
Many “insiders” have switched from selling their company’s stock to buying it.
“Insiders buy their companies’ shares when the stock is cheap,” says Investors’ Intelligence, adding, “They are often very early, but usually right.
Such ‘insider’ switches took place recently in Connecticut Energy, Hercules, Central & Southwest, Sunglass Hut, Ryland Group, Washington REIT and Archer Daniels Midland.”
Books teach kids about money
The following books are designed to help parents teach their children about money:
“The Totally Awesome Money Book for Kids and Their Parents,” by Adriane G. Berg and Arthur Berch Bochner (Newmarket Press, $10.95). Designed for readers age 10 to 17, Berg, a financial expert, and her son Arthur have compiled various games, stories, riddles, charts and drawings about money.
“The Money Book and Bank” by Elaine Wyatt (William Morrow, $11.95). Wyatt provides helpful hints for kids on earning, budgeting, spending and saving money.
“A Penny Saved; Teaching Your Children the Values and Life Skills They Will Need to Live in the Real World,” by Neale S. Godfrey (Simon & Schuster, $18.95.) Designed for kids from preschool to high school, this book includes various games, worksheets and quizzes on saving money.
“Saving and the American Family - A Basic Money Management Guide for Parents and Children,” and “Time to Save - Teacher’s Guide,” by Merrill Lynch, free. To request copies of the 14-page guides, call 206-464-5604 or 800-333-4858.
Get MITTS on market antidote
A good idea for a wild market: It’s a bank certificate of deposit (insured by the FDIC) and issued for a five- or 10-year term, but, instead of fixed interest, you get a lump sum at maturity based on the rise in the stock market over that time.
For example, if you invest $10,000 and the S&P 500 index doubles, you get back $20,000. If the S&P falls 20 percent (or more), you still get your $10,000 back.
This “Market Index CD” is being offered by Legg Mason Wood Walker Inc. But don’t forget Merrill Lynch & Co.’s version: guaranteed downside (often plus a kicker), unlimited upside. Called MITTS, they trade just like stocks under such ticker symbols as MIM, MIX, MTT and more.