Atlas Under Paramount

We continue to believe that the greatest future of your company lies in using a substantial but varying portion of the capital in special situation such as reorganizations and the financing of new capital issues, rather than in keeping all capital invested in a wide list of securities dealt in on the leading stock exchanges. While we carefully investigated many such opportunities during 1934, prudence dictated extreme caution in placing large amounts of capital into any immobile form of investment until an upward trend could be seen with greater clarity.

Such was President Floyd Bostwick Odium's restatement of policy in the last annual report of his Atlas Corp., biggest investment trust in the U. S. Mr. Odium's theories of how to run his $110,000,000 company are as new to the U. S. as his own success. The average trust merely invests its funds in a long list of good stocks & bonds that any shrewd investor would buy if he had the money. In Britain, where this type of financial institution is so old that prime trust debentures sell on a par with government securities, the investment trust has more economic justification. There, as underwriters and investors, the big trusts often finance an entire enterprise during the early stages when profits may be biggest but risks are always greatest. Thus speculative British securities tend to become seasoned in the portfolios of trusts, which because of their diversification can safely assume the risks, rather than in the hands of the public as in the U. S.

Mr. Odium's theories hew close to the British tradition. Last week, apparently satisfied that "the upward trend could be seen with greater clarity." the young, sandy-haired financier made U. S. financial history by offering'to underwrite two big issues of new Paramount Publix Corp. securities. Under the film company's plan of reorganization, already approved by security-holders and the courts, Paramount's old stockholders will be offered a smaller amount of new shares in exchange for their present holdings and also the right to buy more. The Atlas offer, which Paramount swiftly accepted, was to buy all, or any part that stockholders do not take up, of a $6,410,000 issue of second preferred stock and 800.000 shares of common. As an underwriting fee of 1%, Atlas will receive $65,000, far less than most bankers would charge for the same service.

Though the Paramount deal was Mr. Odium's first try at underwriting, it was by no means his first venture into the film business. Atlas already holds sizable blocks of old Paramount stocks & bonds acquired literally at receivership prices. Last year Atlas helped distribute in England some of Chase National Bank's big but involuntary investment in Fox Film.

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