A Fast $70 Million

The two high-altitude standouts on last week's gyrating American Stock Exchange (see Wall Street) were General Development Corp. and Universal Controls, Inc. Shares of General Development, the mailorder merchandiser of Florida houses and lots (TIME, May 19), zipped from 59 1/8 to 69 5/8, and its success boomed the stock of a flock of lesser companies planning Florida land developments. Universal Controls, an electronics maker, moved from 84 to 97. Both stocks have more than doubled since Jan. 1. Last week Universal announced a four-for-one stock split, plus a 10% stock dividend and a boost in the yearly cash dividend from $1 to $1.20 on the present stock. General Development leaked word of a three-for-one split, planned after the company distributes a 25% stock dividend in mid-May.

Unknown Giant. The man who benefited most from the fast rise is an up-from-the-sidewalks Canadian financier and promoter, Louis Arthur Chesler, 46, chairman and prime mover of both Universal and General. Lou Chesler came to the U.S. three years ago with $4,000,000, has since run up a paper profit of $70 million on his Universal and General holdings alone. Yet few Wall Streeters know him, since he keeps in the background, trains the limelight on his U.S.-born junior partners.

A bulging (6 ft. 2 in., 256 lbs.), blue-eyed son of an immigrant Lithuanian shopkeeper, Chesler grew up in Peterborough, Ont., quit university to go to work on Toronto's Bay Street. As a customer's man for the brokerage firm of Draper Dobie & Co. Ltd., he showed a talent for picking the right stocks, later grew rich underwriting dozens of Canada's new mining projects, chiefly those of Ventures Limited, the mining colossus.

On the way up he also raised some eyebrows. In 1941 Chesler turned up as a crown witness in a case involving illegal sales of Canadian government bonds. Actually, Chesler and his firm had been ordered by the Bank of Canada to play along with the hanky-panky to trap the villain.

Coming to the U.S. in 1956, Chesler bought a major interest in a company, which then acquired the Warner Bros, film library for TV and became Associated Artists Productions Corp. After a boardroom battle, Chesler signed a deal to sell 820,000 shares of Associated to National Telefilm Associates, Inc., though he controlled only 400,000 shares; later Chesler backed off and sold for a higher price to United Artists. To end a court fight, United Artists later paid $2,000,000 to N.T.A. The deal hurt Chesler's reputation on Wall Street--but it did not halt his empire building.

Shell Game. Chesler stalked small companies with big potential, accurately sniffed the coming boom in electronics, Florida land, and leisure activities, including horseracing.

He spotted Universal Products Co. early in 1956 when it was a corporate shell with a treasury of $10 million. Chesler took control by putting up $1,000,000, plus $2,500,000 from millionaire cronies such as Baltimore Colts' Owner Carroll Rosenbloom. ("Who wouldn't pay $1,000,000 to get control of $10 million?" asks Chesler.) With Universal's cash, Chesler bought Baltimore's American Totalisator, which owns and leases 80% of the racetrack "Tote" systems that automatically figure and post bets, odds and winnings. By swapping stock, Universal later acquired General Register Corp. (ticket machines for movies and racetracks) and C. P. Clare & Co. (electronic relays). The company, then renamed Universal Controls, paid cash for Canada's

Industrial Wire & Cable Ltd., and Providence's Grant Money Meters Co. (toll-road coin boxes). Universal estimates that earnings for the fiscal year ending in March will rise 56% to about $3,900,000, or $2 per share. That means Universal stock sells at a steep 48^ times earnings; Chesler's $1,000,000 ante in Universal has zoomed to a market value near $25 million.

Chesler constructed General Development on another corporate shell: Detroit's Chemical Research Co. He bought in cheaply, helped steer the company into Florida real estate, in mid-1957 picked up another 520,000 shares at $7.15 each, and went to work to expand the company. General's earnings rose from $2.1 million in 1957 to $6.6 million in 1958, or $2.80 a share. Yet this is not cash on hand. When General sells an $895 lot for $10 down and $10 a month, it counts the full profit on the sale as current profit, even though it will not receive it all for 8Jr years. To bolster its cash position and permit it to expand, it is closing a deal with the Prudential Insurance Co., which will buy $10 million in General Development bonds.

Hunger for Growth. The Midas touch has brought burly Lou Chesler most of the material possessions a man could desire: a 54-ft. yacht, a $250,000 Long Island estate, half ownership of a three-year-old Kentucky Derby hopeful named Atoll, firm control of two growing companies, vast investments in other stocks and Canadian real estate. Still he wants more. Recently he tried to merge Universal with Underwood Corp., got a cool reception and retreated. What makes Lou Chesler run? Answers Chesler: "I just cannot resist the challenge of an obvious business opportunity. Though this may sound corny, I'm also interested in deals like General Development that may do people some good in human terms." Then he grins: "Of course, I may go broke. But I don't think I will."

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