somewhat better than those of the Standard & Poor’s 500-stock com-
posite and considerably better than those of the DJIA.- Personal note: Many years before the stock-market pyrotechnics in
that particular company the author was its “financial vice-president”
at the princely salary of $3,000 per annum. It was then really in the
fireworks business. In early 1929, Graham became a financial vice pres-
ident of Unexcelled Manufacturing Co., the nation’s largest producer of
fireworks. Unexcelled later became a diversified chemical company and
no longer exists in independent form. - The Guidedoes not show multipliers above 99. Most such would be
mathematical oddities, caused by earnings just above the zero point.
Chapter 16. Convertible Issues and Warrants- This point is well illustrated by an offering of two issues of Ford
Motor Finance Co. made simultaneously in November 1971. One was
a 20-year nonconvertible bond, yielding 7^1 ⁄ 2 %. The other was a 25-year
bond, subordinated to the first in order of claim and yielding only
41 ⁄ 2 %; but it was made convertible into Ford Motor stock, against its
then price of 68^1 ⁄ 2 .To obtain the conversion privilege the buyer gave
up 40% of income and accepted a junior-creditor position. - Note that in late 1971 Studebaker-Worthington common sold as low
as 38 while the $5 preferred sold at or about 77. The spread had thus
grown from 2 to 20 points during the year, illustrating once more the
desirability of such switches and also the tendency of the stock mar-
ket to neglect arithmetic. (Incidentally the small premium of the pre-
ferred over the common in December 1970 had already been made up
by its higher dividend.)
Chapter 17. Four Extremely Instructive Case Histories- See, for example, the article “Six Flags at Half Mast,” by Dr. A. J.
Briloff, in Barron’s,January 11, 1971.
Chapter 18. A Comparison of Eight Pairs of Companies- The reader will recall from p. 434 above that AAA Enterprises tried to
enter this business, but quickly failed. Here Graham is making a pro-
586 Endnotes