Atlas into Hearst

Slim, soft-spoken Floyd Bostwick Odlum, who built Atlas Corp. from a $40,000 experiment in 1923 to a $121,336,779 investment trust ten years later, has one very special gift: an uncanny ability to sense ''special situations." Last week Floyd Odlum released Atlas' 1940 report, and with it a bagful of cats. His newest "special situation" was revealed to be Hearst Consolidated Publications, Inc., 7% cumulative Class A stock. First reaction of many a Wall Streeter: "What does Odlum see in that?" Second reaction: look.

Hearst Consolidated was formed in 1930 to supply big-spending William Randolph Hearst with more cash. It was sold to the public mainly by advertisements in Hearst publications. Combining twelve of the best Hearstpapers and the lucrative American Weekly, Hearst Consolidated easily earned the $1.75 annual Class A dividend through 1937. In 1938 the recession cut its profits to almost nothing. But the Class A has a catch clause: failure to pay four consecutive dividends puts control in the hands of the 1,930,086 outstanding shares. Hence, Hearst management turns cartwheels to pay at least one 45-c- dividend a year making the Class A yield 8 3/4% at current prices (around 5). Aside from the control setup, Super-Statistician Odlum figured that the Class A was worth over $6 a share even after paying off all debts and eliminating the $84,500,000 of circulation, good will, etc.

Convinced he had a real "situation," Odlum began buying Hearst Consolidated last July, has been at it ever since. By 1940's end he had quietly picked up 26,980 shares, has since added about 34,000 more. He is now by far the biggest of some 46,000 Hearst Consolidated stockholders, and if control ever passes to them, he will be in the driver's seat.

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