The Touch That Failed

Hyman Marcus is a fast-talking former math teacher and Phi Beta Kappa man (Columbia) who in three years transformed a shaky manufacturer of laundry machines into a corporate complex grossing more than $90 million. In late 1953 he bought his way into U.S. Hoffman Machinery Corp., an oldtime concern with $13 million in debts, shored up its tottering finances, became president in 1954. By trading stock in the Hoffman Corp., he acquired 23 profitable subsidiaries, manufacturing everything from candy to tin cans. But somewhere along the line, Hyman Marcus' magic touch began to fail. Day after day in recent months, U.S. Hoffman stock has been among the most heavily traded on the stock exchange, dropping from a high of 22 1/8 a year ago to last week's low of 8 7/8.

New Faces. Last week Hyman Marcus, at 42, moved upstairs to become board chairman of U.S. Hoffman. In came a group of new faces. Charles E. Stahl Jr., a 42-year-old Westchester County banker, will become president, and onetime U.S. Director of Price Stabilization Michael Di Salle chairman of the executive committee. Among the five new directors on Hoffman's nine-man board: Eric Johnston, president of the Motion Picture Association of America. Stahl and Di Salle will buy Marcus' shares (reported to be about 200,000) in the corporate name, and gain working control of the company.

Chief reason for the sleigh ride in Hoffman stock was clear last week. Though Marcus announced last January that., Hoffman's earnings for the first nine months of 1956 were $1.51 a share, the year's earnings turned out last week to be only 43-c- a share, about one-third of 1955 earnings. There also was evidence that large blocks of stock had been dumped on the market by some who had traded their companies for Hoffman stock. Originally, they had promised to hold the stock for investment purposes. But later some of them had a change of heart when Marcus ran into personality conflicts with subsidiary executives (most of whom were kept on after the Hoffman take-over). Furthermore, Marcus was so busy buying new companies that he had little time to run his corporate complex. In January Samuel Schulman, president of George McKibbin & Son, book manufacturers bought out by Marcus last year, and his associates started selling 144,000 shares of Hoffman stock with SEC approval.

Honeymoon. Despite Hoffman's troubles, Stahl and Di Salle are confident of the company's soundness, hope to tighten up its administration and step up earnings. Says Di Salle: "We're moving in on a family that has several new marriages, and all newlyweds have to adjust." On the honeymoon will be an unwelcome guest, the SEC. It is investigating to determine why there were such big discrepancies in the public financial statements of the corporation and whether U.S. Hoffman stock was traded illegally.

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