Question -- I own shares of AutoNation Inc. The company's annual reports tell me everything is going great, but the stock price languishes. What's the long-term outlook?-- T.A., ChicagoAnswer -- The stock of this company that sells and rents cars has been stuck in reverse for quite a while. Down about 16 percent this year, AutoNation shares suffered declines of 25 percent in 1997, 36 percent in 1998 and 38 percent in 1999.
This aggressive company operates more than 270 Web sites and sold more than $1 billion worth of vehicles on the Internet last year.
It hopes by midyear to spin off to shareholders in the form of a tax-free dividend its ANC Rental Corp., which includes the rental companies Alamo, National and CarTemps USA. About 200 National employees recently lost their jobs in a move to consolidate that unit's operations.
The spin-off is designed to establish AutoNation as a pure play automotive retailer. It boasts about 400 automotive retail franchises in 23 states. However, it exited the used-vehicle megastore business last December by closing 23 of those facilities and integrating six others with new vehicle franchises, resulting in a loss of about 1,800 jobs.
AutoNation shares currently rate a consensus "buy" from the Wall Street analysts who track it, according to the I/B/E/S International research firm. This consists of three "strong buys," two "buys," a "hold" and an "underperform."
"AutoNation rarely has upside earnings surprises, tending to either be on target or below the consensus," said Joseph Kalinowski, equity strategist with I/B/E/S. "However, its earnings are projected to grow 21 percent this year, compared to 14 percent for its industry."
Question -- My investment adviser bought AIM New Pacific Growth Fund (formerly GT Global New Pacific Growth Fund) for me last year when it was doing well. However, in looking back at its history, I see some very poor years. I think I may be too conservative of an investor for this fund. What do you think of it? -- G.K., Washington, D.C.
Answer -- Recent times haven't been so terrific either.
The $122 million AIM New Pacific Growth Fund gained less than 4 percent over the past 12 months and suffered a three-year annualized decline of 16 percent. Both results place it among the worst-performing of the Pacific/Asia funds that exclude Japan.
"The fund has held a pretty large Australian stake, which weighed it down when the rest of Asia has been doing well," noted Bridget Hughes, international fund analyst with the Morningstar Mutual Funds investment advisory.
However, the fund is mercifully being merged into the $70 million AIM Asian Growth Fund, a far better performer that puts a greater portion of its portfolio into small- to medium-sized companies. That more aggressive fund, however, has nearly 30 percent of its portfolio in Chinese stocks that could be volatile. It also faces a significant task in absorbing the larger AIM New Pacific Growth Fund.
So, if you're concerned about being too conservative for AIM New Pacific Growth Fund, you may feel the same way about AIM Asian Growth Fund.
More than one-fourth of AIM New Pacific Growth Fund is in stocks of Hong Kong and one-fifth is in South Korea. Another 15 percent of its portfolio in Taiwan, with significant holdings in Singapore, Australia and Thailand as well. Biggest industry concentrations are large banks, land development, food chains and telephone companies.
The fund requires a 5.5 percent front-end "load" (sales charge) and $500 minimum initial investment.
Question -- I'm a regular reader of your column and will become 701/2 this year. I need to start taking mandatory distributions from my individual retirement account. My husband, who is five years older than me, is my beneficiary. It doesn't seem to make sense for me to use the joint life expectancy table with someone older to determine my distributions, even though I want him as my beneficiary. Is there another way? -- P.S., via the Internet
Answer -- Keep the arrangement the way it is.
The IRS determines IRA distributions using a formula based either on the owner's life expectancy or the joint life expectancy of the owner and the primary beneficiary.
Though your husband is older than you, using a joint life expectancy still gives you lower taxable yearly distributions than if you use your single life expectancy, said Ed Slott, editor and publisher of Ed Slott's IRA Advisor newsletter.
"With the age differential between you two, you can spread the distributions over 18.8 years, while it would be 16 years if you just used your own age," said Slott, whose IRA Advisor, 100 Merrick Road, Rockville Centre, N.Y. 11570, costs $79.95 for a one-year subscription. "Even if your beneficiary was 90 years old, you'd be better off with joint life."
Andrew Leckey answers questions only through the column. Address questions to Andrew Leckey, "Successful Investing," 98 Henry St., Department 183, Brooklyn, N.Y. 11201, or by e-mail at successinv@aol.com.