Working on the Railroad

In Wall Street last week, when railroad stocks shot up to their highest level in 20 years, the star performer was Northern Pacific. In two days the stock of "Nipper"*jumped more than 10 points. At 94 3/8 it was selling at more than three times last year's low. Investors liked the Nipper not because it was a railroad, but because it owns or has mineral rights on 3,200,000 acres of land in Williston Basin, the nation's richest new oilfield. Its rise surprised thousands of bears who had thought the stock too high after a big previous rise and sold it short. Last week, as the shorts frantically bought to avoid heavier losses, they drove the stock still higher.

Surprise Package. Northern Pacific proved itself chock full of other surprises. At week's end, Ohio Match Co., in the sleepy town of Wadsworth, Ohio (pop. 7,943), let'out a well-kept secret. Its annual report disclosed that it owns 167,500 shares of Northern Pacific, the biggest single block. If this did not give Ohio Match working control of the railroad, it at least gave it the biggest single voice in its management. Unlike other investors, Ohio Match had not been buying Nipper for its oil lands; it was buying it for its timber lands. By virtue of its huge purchases, Ohio Match had been able to get long-term contracts to log Nipper's white pine stands for matches.

By last week, the Northern Pacific stock, for which Ohio Match had paid $4,715,000 in 1950, was selling at a market value of $15,577,000, a paper profit of $10 million, or about $10 for each, of Ohio Match's own 946,740 shares of common stock.

But the biggest surprise came when Ohio Match let out that it, in turn, is controlled by Norton Simon, 45, chairman of famed Hunt Foods, Inc. (TIME, Oct. 8, 1945), a big and successful West Coast food-packing company. Shrewd, canny Simon, who has an X-ray eye for spotting undervalued companies, had kept his control a secret. He had moved in when Government trustbusters, in 1946, forced the principal stockholders of Diamond Match Co. to sell their controlling interest in Ohio Match. Simon, checking into the company's books, found it had a net worth of $7,500,000, but was being valued at about $5,000,000 on the market. For $2,000,000 plus, Simon and associates acquired nearly 50% of the stock and control. He kept in the background by letting an associate, Hart Isaacs, represent him on Ohio Match's board.

Surprise Snub. Last year, when oil was struck in Williston Basin, Simon took a direct hand in the railroad. He used Ohio Match's voting power to elect himself to Northern Pacific's board of directors, and began making his presence felt. Simon insisted that Northern Pacific's haphazard way of handling its oil leases be improved, got the board to hire Dallas' famed geologist E. De Golyer (TIME, March 24) to survey the railroad's oil lands, and brought in Standard Oil Co. of California's former assistant vice president LeRoy Hines as a new Nipper officer in charge of oil. When Nipper's stockholders hold their annual meeting next fortnight, Simon is expected to shoot off more fireworks. And it looked as if Wall Street would be hearing a lot more about both Northern Pacific and Norton Simon.

*A play on the initials "N.P.R."

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