• Nationally syndicated columnist
• Email: mjberko@yahoo.com
• Address: P.O. Box 8303, Largo, FL 33775
© 2013 Creators.com
• Nationally syndicated columnist • Email: mjberko@yahoo.com • Address: P.O. Box 8303, Largo, FL 33775 © 2013 Creators.com


Dear Mr. Berko:

We bought 260 shares of Invesco Ltd. in December 2007 at $31.45, and the stock hasn’t been back there since. We have nine other stocks, but this is the only one we are concerned about. We need to raise about $7,500 more in cash to modify our home so our Marine son, who was injured in Afghanistan, can move in with us till he recovers. We are thinking of selling Invesco. Should we sell now or wait until Invesco returns to our purchase price? Also, our son has about $18,000 in his checking account and receives a monthly government check. Are there any banks that can give him more than 0.5 percent on his money? We appreciate your help.

R.P., Gainesville, Fla.



Dear R.P.:

Morgan Stanley took Invesco (IVZ) public with a 29 million-share initial public offering priced at $14. Then, 18 months later, Morgan Stanley underwrote 31 million more IVZ shares at $21.38. Today IVZ is trading at $27 and has 445 million shares outstanding, of which about 190 million shares are owned by Highfields Capital, Vanguard, Goldman Sachs, JPMorgan Chase, BlackRock, T. Rowe Price and Wellington at, I suspect, lower than the current price.

Invesco is a plain-vanilla, unimpressive money manager ($680 billion under management) that runs plain-vanilla investment accounts for institutions, corporations and high-net-worth individuals, with plain-vanilla results. Not a particularly well-managed company, IVZ trails its peers on a profitability basis, with operating margins of 21 percent, well below the industry standard of 29 percent. Its 2012 purchase of Morgan Stanley’s retail mutual fund operations, as well as Van Kampen, put more than 1,100 different mutual funds under the IVZ umbrella. Frankly, I can’t imagine how any management company has the time, skills and personnel to effectively oversee the portfolio management and marketing of 1,100 mutual funds while managing tens of thousands of investment accounts for corporate clients, institutional clients and high-net-worth individuals. That doesn’t seem to concern the suits on Wall Street. But my opinion of IVZ differs from their bullish projections. The Street appears enamored of IVZ’s management, its recent acquisitions, its huge smorgasbord of mutual funds and its future revenue, earnings and dividend growth. The consensus believes IVZ, in a few years, could trade in the high $50s and report earnings of $3 a share. I don’t see enough continuing demand for IVZ’s services or its plain-vanilla product offerings.

In 2012, revenues grew to $4.2 billion from 2011’s $4.1 billion; net income increased 8 percent, to $1.70 a share, as the dividend zoomed 43 percent, to 69 cents, and yields 3 percent. Those are good numbers, but I doubt IVZ’s future share price performance will be worth a tinker’s dam. I’m impressed that CEO Martin Flanagan owns 1.4 million shares, but I respectfully advise him to diversify his portfolio to include some telephone utilities, railroads, banks, drug stocks, toiletry issues, and oil and gas pipelines.

I strongly doubt IVZ will return to your 2008 basis of $31.45 in the coming couple of years. So sell your 260 shares and put a certain $7,000 in your hands. Then make those improvements so your Marine can move home and recover in the bosom of his family.

Next, go to http://www.oldfnb.com and visit the Old Florida National Bank – home-ported in Orlando and the 39th-largest bank in Florida. If your Marine opens a checking account and applies for a debit card, OFNB will pay him 3 percent interest on his checking account balance up to a maximum of $20,000. There are a few minor caveats but no sneaky rules or complex requirements like the big banks’. OFNB is a solid bank, and several readers in the Orlando area tell me that OFNB is consumer-friendly, that management doesn’t nickel-and-dime you to the poorhouse and that the tellers greet you by name. This sounds like my kind of bank.