who seeks highincome from his investments, is another value manager.
Growth is not a big deal to a value stock manager. What valuemanagers are looking for is not the Prom Queen but rather the homelywallflower nobody wants to dance with. Yet there is hidden beautyin this young lady: her character, her values, her future. Indeed, thevalue manager seeks those companies whose stocks have fallen onhard times, who have been forgotten by the fickle market, but whosefuture is brighter than many think. Why? Perhaps because the stockis selling at a discount to the company’s break-up value. Or, perhaps,the stock trades at below book value. Historically, when this occurs,
21PETER J. TANOUS
the market will in time recognize a bargain and the shares will be bidup. Better to get in early, when no one is looking.
One of the problems with value investing is timing. Once youidentify one of these forgotten heroines, it is tough to figure out whenher fortunes are going to turn around, or if and when others are goingto follow you and bid the stock price up. As a result, value investingoften takes patience. In our interviews with Mario Gabelli and LauraSloate, you will discover how these two Gurus arrived at a similarmethod to address the timing issue.
You might also think that value investing is less risky than otherstyles. You remember we discussed what happens when a growthstock suffers bad news - you get hurt deep and quick. With valuestocks, the bad news is already there, and presumably is reflected inthe price. So, if you have done your homework, you are probablybuying at or near the bottom. Right? Well, maybe not. Read on.
Here are the key characteristics of value stocks:
¢ Low price-earnings ratio¢ Left behind by the market¢ Sells at a discount to book value
¢ Has hidden assets
Growth Versus Value v Which style is better, value or growth?That’s the 64 Dollar Question that I would have preferred you notask. That question is addressed at some length in the book. Briefly,studies have shown that at least in the past fifty years or so, valuestocks have provided higher returns than growth stocks. I realize thatthis probably surprises you. What’s the trade-off? You will hear GuruRex Sinquefield, the Chairman of Dimensional Fund Advisors, claimthat the reason value stocks have outperformed growth stocks is thatvalue stocks are riskier than growth stocks. The theory is that youget paid for the risk you take: if you buy a riskier type of security,you expect both higher risk and higher returns. Some of our Gurusfrom the academic community agree with him. Thus, if value stocksare riskier than growth stocks, the returns on value stocks ought tobe higher.
But is it true that value stocks are riskier than growth stocks? Getready for a fight on this subject. Sinquefield insists they are. Another
22INVESTMENT GURUS
of our Gurus, Nobel Prize winning economist Merton Miller, isn’t sosure. Neither is Nobel Prize winner Bill Sharpe. An often cited studyby Josef Lakonishok, Andre Shleifer, and Robert Vishny (“ContrarianInvestment, Extrapolation, and Risk,” The Journal of Finance, vol.XLIX, No. 5, December, 1994) claims that over the last fifty years,value stocks have not proven to be riskier than growth stocks.
Value and growth stocks tend to behave differently. There areperiods when value stocks outperform growth stocks, and, conversely,there are periods when growth stocks outperform value stocks. That’swhy we consultants try not to take sides on this issue. We want bothstyles in most portfolios since that will tend to even out performanceover time. When one group is underperforming the market, the otheris likely to be outperforming the market.
Momentum Investing v This style has been quite popular latelyand in the right market environment, the returns can be spectacular.In essence, these managers ride trends, and when the momentum isin their favor, they hop on board. Naturally, in good markets thesemanagers can do very well if they are particularly skillful. Two ofour Gurus, Richard Driehaus and Robert Gillam, are momentummanagers. Driehaus is a paradigm of momentum investing. We willvisit Richard in his mansion in Chicago and Bob Gillam in the scenicsurroundings of his home office in Anchorage, Alaska.
Interestingly, some managers shy away from being called mo-mentum managers, including Gillam and another of our Gurus, ScottJohnston. There is, after all, a gunslinger aura about the fellows whoemploy this technique. Back in the sixties “gunslinger” was the termwe used for those managers who bought and sold very aggressively.By nature, in fact, momentum managers must be quick on the draw.When we speak with Gillam, he’ll give an example of a conferencecall on technology stocks which caused him to liquidate a large posi-tion before the call was even over.
In essence, momentum managers are avid proponents of Newton’sfirst law of motion which holds that objects in motion tend to stayin motion until another force intervenes. To put it simplistically, tomomentum managers, stocks that are hitting new highs are more in-teresting buys than stocks that are hitting new lows. There are vari-ations and refinements to the approach that you will encounter inthe book, but basically, the momentum proponents are interested ina stock with strong upward price momentum.
23PETER J. TANOUS
Before we conclude our little primer, here are two more definitionsthat come up in the book. They relate, too, to style of investing:
Top Down Investing Y This style of investing refers to an approachused by the manager in finding a particular stock he wants to buy.The top down manager looks at the big picture first. What’s the eco-nomy like? Is this a good time to be buying stocks? Then, what indus-tries are attractive to buy now? Having selected the industries, whatstocks are attractive within those industries, and so forth. You seehow the process works.
Bottom up Investing w This is, of course, the opposite of the topdown approach. Here, the analyst looks first at the company, identi-fying it usually because it is so attractively priced on its own merits.Value investors almost invariably use this approach. In essence, theysay, I don’t care if the world is coming to an end, I know for sure thatat this price this stock is a screaming buy, so don’t bore me witheconomic statistics, because | just don’t care. Incidentally, this styleis sometimes referred to as “bottoms up” investing, but only bymanagers who have spent too much time in bars.
Measuring Investment Returns
I think you probably know that measuring investment returns isnot as simple as those mutual fund ads would like you to think.“Compound annual return of 15% for ten years!” Or perhaps “22%average annual returns for the past 6 years!” Also: “If you had inves-ted $10,000 in our fund in 1975, you would today have...(a RollsRoyce with a lion in the back seat?)” I know you’ve seen them all. Inmy business of investment consulting, we use techniques to measurenot only the returns of different investments, but also the risk theinvestment manager is taking to deliver those returns. The trick, ofcourse, is to get all these damn statistics and performance claims ona level playing field. Let’s take a look at why this playing field isn’talways level.
How to Deceive Almost Anyone with InvestmentReturn Statistics
Here’s an investment trick you can use at cocktail parties, although
24INVESTMENT GURUS
if this makes the party a success, you might want to expand your listof friends. (It will also change forever the way you look at performancestatistics.) You ask your friends a hypothetical investment question.Manager A has had an average annual return of 14% per year for thelast five years. We have every confidence that this record will continuefor the next five years. Your other choice is Manager B, whose averageannual return over the last five years was 9% and, likewise, we expectthat her return will continue over the next five years. Question: whichmanager would you want to manage your money for the next fiveyears?
Dumb question, right?
Maybe not. Let’s take a look at the year to year record of bothmanagers. Manager A is the one with the 14% average annual return.Here’s his record:
Year Maniger A
 
Oa,40%Bs(50%)40%
12345
 
The first observation here is that this is a pretty wild manager. Notethe wide swings from year to year. Everything was going along greatuntil the fourth year when he lost 50%. The following year was muchbetter, however, and he was up again by 40%. Overall, the averageannual return for this manager is 14% per year. (Just take the sumof the year-to-year performance and divide by 5.)
Our second manager, Manager B, is the one with the 9% averageannual return. Here’s her record:
25PETER J. TANOUS
Year Marager B
 
 
Talk about consistency! And, of course, it is pretty easy to figureout that this record averages out to 9% per year.
So, which of these managers made the most money over the fiveyear period? We assume, of course, that the manager with the 14%average annual return made more money than the manager with the9% average annual return. But did he? Let’s take a look.
To figure out which manager made the most money, we must usea geometric progression. That way, we can measure real money, notjust percentages. Let’s start with a base of 100 in both cases and seewhere we go from there, applying the percentage returns each yearfor each manager. Here are the results:
Year Manager A Base 100 Manager B Base 100
 
a0, im om 1G40% 18 1is
2% au T.3‘50% 4 101 id40% 141 14
 
Hello! Manager B, the one with the 9% average annual return, mademore money than Manager A, with the 14% average annual return.Surprise.
This example gives us three things to remember:
e When measuring performance, use the Base 100 method(geometric) to measure real dollars and get real earnings. Don’tuse “average annual return.”
26INVESTMENT GURUS
* Look for consistency of performance. Consistency is whatsaves you from a really bad year. Look again at Manager A.Imagine what would have happened if you put your money withhim at the beginning of Year four. You would have lost halfyour investment by the end of the year. Losses like that are veryhard to make up. And with a volatile manager, you just can’tpredict when those very good and very bad years are going tocome along.
e When you look at a manager’s record, play it safe: assumethat you will be unlucky enough to invest just before his worstyear. Then see how you would have done.
Of course, when we meet the Gurus, we will want to know whattheir performance has been. If we can’t use average annual return,what are we supposed to do? Do we have to recalculate everythingusing the base of 100? That seems pretty awkward, doesn’t it? Youbet. The difference is that when we calculate returns the right way,we speak of the compound annual return. Compound returns simplyexpress geometric progression as a yearly figure.
In the preceding example, the compound annual return for ManagerB, who generated a consistent 9% every year, is the same as the aver-age annual return, 9%. But for Manager A, who earned a 14% averageannual return, the compound annual return is only 7.1%. In otherwords, if Manager A had consistently earned 7.1% in each of the fiveyears, he would have ended up with the same amount of money ashe did after five years of wildly fluctuating returns.
You can try this on a pocket calculator, by multiplying 100 x 1.071x 1.071 x 1.071 x 1.071 x 1.071. You'll get something pretty closeto 141. There is a formula for figuring out what the compound annualrate of return is if you have the beginning and ending figures andthe number of years, but I won’t put it here because it is too complic-ated. However, most computer spreadsheet and accounting programshave this function built in. Thank goodness for computers!
Compound annual returns simply express smooth geometric pro-gressions as a yearly figure. The compound annual return (ManagerA’s 7.1%) is also called the “geometric” average, whereas the averageannual return (Manager A’s 14%) is an “arithmetic” average.
Remember this example the next time you see a mutual fund adtouting “average annual returns.” (A lot of them still do.) For our
27PETER J. TANOUS
purposes, we will use compound annual return exclusively whendiscussing the performance of the Gurus.
That does it for our review. In this short primer, I have concentratedon many of the advanced techniques used today to evaluate portfoliorisk and return. We covered the importance of measuring returns ac-curately, using compound annual return, not arithmetic average an-nual return. We also spent time breaking down the different styles ofsecurity selection. That way, when we talk to a value manager, you'llknow why he or she is different from a growth manager.
Of course, these are the very tools that you should use in your owninvestment program as well. As you read through the interviews andthe concluding chapters, you will learn the value of diversificationby style. Diversification is not buying 50 value stocks. You'll hearPeter Lynch say that buying ten emerging growth funds is not diver-sification. He’s right, of course. What you should do is diversify bystyle and company size, and possibly geography as well. You'll learnthe importance of having a portfolio with both value stocks andgrowth stocks. That’s the key to intelligent diversification. You'll alsolearn the importance of measuring the risk you are assuming withdifferent types of investment, and whether or not the expected returnsare worth the risk.
We're now prepared to talk to the Investment Gurus. Let’s go outand meet them.
28PART TWOTHE GURUSTHE GURUS
Michael Price, Mutual Shares
Richard H. Driehaus, Driehaus Capital Management, Inc.
Mario Gabelli, Gabelli Funds, Inc.
William F. Sharpe, Nobel Laureate, Professor of Finance, StanfordUniversity Graduate School of Business
Peter Lynch, Retired Manager, Fidelity Magellan Fund
Laura J. Sloate, Sloate, Weisman, Murray & Company
Scott Sterling Johnston, Sterling Johnston Capital Management
Eugene Fama, Professor of Finance, University of Chicago GraduateSchool of Business
Bruce Sherman, Private Capital Management, Inc.
Eric Ryback, Lindner Funds
Merton Miller, Nobel Laureate, Professor Emeritus of Finance,University of Chicago Graduate School of Business
Foster Friess, The Brandywine Fund
Van Schreiber, Bennett/Lawrence Management
Rex Sinquefield, Chairman, Dimensional Fund Advisors, Inc.
John Ballen, Manager, MFS Emerging Growth Fund
Roger F. Murray, S. Sloan Colt Professor Emeritus of Banking andFinance, Columbia University Graduate School of Business.
Robert B. Gillam, McKinley Capital Management, Inc.
David E. Shaw, D.E. Shaw & Co.MICHAEL PRICE
Here we are in Short Hills, New Jersey, value investing capital ofthe world. Short Hills, New Jersey? Are you nuts? Not really. Yousee, Short Hills, previously known primarily for a nifty upscaleshopping mall with a Nordstrom and a Neiman Marcus among otherhigh class emporiums, is the chosen home of Mutual Shares, the fundcompany owned by Michael Price, one of the best known and mostsuccessful practitioners of value investing. From his headquarters,which happens to be right next to the famous shopping mall, MichaelPrice runs Mutual Shares out of the offices of Heine Securities. Thatfirm is named after Max Heine, who was Michael Price’s mentor, andwho died tragically in an automobile accident in 1988. AlthoughMichael Price is not exactly a touchy feely kind of guy, his understatedbut clear devotion to the memory of his mentor is a rather endearingside of his personality.
But no more Mr. Nice Guy. Michael Price is as tough and decisiveas he is single-minded. He cares a great deal about his shareholders,another Max Heine legacy, and he goes to extraordinary measures toinsure that his shareholders get full value for the money they investwith him. If you have any doubts about that, just ask those nice fellowswho run Chase Bank about Michael Price. We talk about that in theinterview.
Mutual Shares consists of four separate funds - Mutual Shares,Mutual Qualified, Mutual Discovery, and Mutual Beacon - withcombined assets of over $16 billion. Yet, despite that impressive total,most people have never heard of Mutual Shares or Michael Price.Why? Because he doesn’t advertise. Frankly, he doesn’t have to. I cantell you this: some of the savviest financial people on and off WallStreet invest with Michael Price. They know what they are doing.
Mutual Shares, Qualified, and Beacon state their goal as capitalappreciation and are virtual clones of one another. Their separateexistence arises out of different circumstances. One fund, for example,was acquired when its owners asked Michael Price to run it for them.Mutual Qualified is geared to tax-free accounts. Mutual Discovery isa more global fund than the others.
The four funds have produced total returns over ten years of morePETER J. TANOUS
than 15% per year with about half the volatility of the average equityfund. Mutual Shares has a 20 year history with annualized returnsapproaching 20%. No wonder Price’s shareholders are happy. As youwill see in the interview, Price is not averse to taking huge positionsin a company and making things happen. “Rattling cages,” he callsit. Chilling.
Tanous: Michael, how did you first get interested in stocks?
Price: Well, I was always interested in stocks because the first oneI bought, through my dad’s broker, tripled. I bought 20 shares ofBandag and it went to 90. My dad sold it at 50 or 60; I kept it eventhough I didn’t know anything about it. I always liked looking at thestock tables. This is, maybe, in junior high.
Then, through some of my dad’s friends, I got interested in onelittle facet of the business which was the risk arbitrage business. Ispent a summer observing a small arbitrage department - a womanand three guys sitting around two desks joined together with wiresto the floor of the stock exchange and proxies on their desks. Theywere just trading in the stocks of companies that were about to merge,taking advantage of small discrepancies in the price spread betweenthe two companies. I said, here are three guys, and I knew one ofthem was making a million dollars a year and this is the late sixties,and I said, if these guys can sit on their butts and make a lot of moneyby reading various things, there’s something to this.
To this day, 25 years later, I have the same approach to runningthe fund. We have a bunch of people sitting around a trading desktalking to companies and trading in stocks. Some of the companiesare involved in mergers, or tender offers, or buybacks and spin-offs;others are cheap based on value investing principles that Max broughtto the equation.
We also have a bankruptcy business [this involves buying securitiesof bankrupt companies as part of the funds’ investment strategy]which Max and his old friend Hans Jacobsen brought to the businessin the thirties, and I picked up on. So we have these three disciplinesthat together run the same way as my very first experience on WallStreet.
Tanous:Max Heine comes up in your background and you havecredited him generously for a lot of your early training. Can youidentify a few of the important principles you learned from him?
Price: The great things about Max had nothing to do with investing.
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They had to do with how you live your life as a husband, as a father,as a friend, and as a manager of other people’s money. For instance,Max would always return a shareholder’s phone call. If he got a letterfrom a shareholder, he would call him back. I do that to this day. It’sgreat because it shows the shareholders that you're really paying at-tention. They can’t believe you're calling them back, and they realizethat you care and that you’re working for them. So many manage-ments don’t really believe in that. Max had zero arrogance. As suc-cessful as he was, and as smart and intellectual as he was, he wasable to talk to anyone in the office or building or on the street. Hewas someone who was not full of himself. He kept an extremely levelhead. That helps you make better investment decisions in times ofcrisis.
Tanous:Do you describe yourself as somebody with zero arrogance?
Price: Ask other people. I’m sure some people think I’m full ofmyself and others think I’m okay.
Tanous:Michael, there’s another thing I found, which says moreabout you than anything else - your loyalty to Max Heine. Your firmis still named after him and I noted that there is an endowed chairof finance at NYU. I expect you had something to do with that. Right?
Price: Yeah. When Max passed away, a group of us got togetherto raise money for a chair that I had hoped would create a value in-vesting course at NYU. That didn’t happen until recently. Now theyare starting to structure that.
Tanous:There’s a story out there about how you got interested inbuying some metal companies, specifically Fansteel, Kawecki and thenInternational Mining.
Price: How did you find out about that?
Tanous:Like you, I do my homework. I'd like you to retell that storybecause I think it’s a good illustration of your investment process.
Price: In 1976, when valuations were much lower than they aretoday, I had learned that one of the things you do is watch smartpeople. This is a business where, especially in our game of bankruptcyand cheap stocks, there are certain people out there who controlcompanies with large amounts of money. These are smart people andyou want to be buying what they are buying. You never want to beselling what they’re buying. Right? The Pritzkers, Thomas MellonEvans back in those days; today the Tisches are smart. A Carl Icahntype, a George Soros; you don’t want to be on the other side of a
33PETER J. TANOUS
trade with people like that. Back in the seventies there were a wholeother group of names that I liked to watch. David Murdock, who tothis day still controls Dole, and Castle & Cook was one.
One day out of the blue sky, a company called Crane Corp. [whichmade plumbing products], run by Thomas Mellon Evans, the Pittsburghfinancier, made a tender offer for a company called Fansteel. Bothwere on the New York Stock Exchange. Fansteel was pretty clean.
One of the things I do is look at every merger announcement. Whata merger tells you is what businessmen are willing to pay for a busi-ness. I think it’s the best indication of value. Compare that with whatsome Wall Street analyst is saying. When an analyst says some radiostation is worth twelve times operating cash flow, well, that’s not trueuntil someone actually pays twelve times operating cash flow. That’swhen you know what it is worth. Okay? So when Thomas MellonEvans says | want to buy all of Fansteel, the first question I ask iswhy? The second question is: does it make sense? These are the simplebasic things you do and we continue to do when there are mergerannouncements.
Well, I got the S&P tear sheet - we were a lot less sophisticatedthen, no laser disks or electronic data. I had to go across the street tothe Stock Exchange to make copies of the 10Qs and 10Ks. We didn’thave a service delivering them to the office. We didn’t have a libraryat all, so I borrowed the annual report from Goldman Sachs in ordernot to have to wait four days for the company to mail it.
I started reading this stuff and I saw that Fansteel makes refractorymetals. | didn’t know what refractory metals were so I looked it upin the dictionary. There were four: molybdenum, tantalum, tungsten,and one other, columbium. These metals add strength, conductivityto electricity, and other properties. So I did a little work on each ofthese metals, and, now, I noticed that one of the metals Fansteel dealsin is tantalum. I couldn’t find anything on tantalum. So I got out theNew York Yellow Pages and sure enough there’s a company in theYellow Pages called Tantalum Corporation of America. I’m not makingthis up! I called them up and I got some guy on the phone calledLarry and I introduce myself. I tell him I’m working at this mutualfund and I’m trying to find something out about tantalum becauseCrane just made an offer to buy Fansteel. At the other end of thephone | heard: “Crane just made an offer to buy Fansteel!” And I said,yeah, what’s so incredible about that?
34INVESTMENT GURUS
He said two things. One was, well, “That must be because of all theThai slag in all their warehouses.” Thai slag is what tantalum comesfrom. And, of course, in the 10K there was no disclosure about aBaltimore warehouse full of Thai slag. But it was a very valuable, offthe balance sheet, hidden asset. Okay? It turns out Larry was a metalsbroker who dealt in tantalum. The second thing he said was, “Youought to take a look at Kawecki Berylco.” So, not only did I startbuying Fansteel right away because I discovered a hidden asset, andwe made some money on that, but I found in Kawecki Berylco a $9stock with a $15 book value per share and a very clean balance sheet.It was controlled by Molycorp.
And then I looked at Molycorp and found a company that controlledit, called International Mining. So I looked at International Miningand found that they owned a bunch of companies including Kawecki,Molycorp and others. So I laid it all out on a chart and started buyingstock in every one of the companies, because, at that time, metalsprices were taking off. There were shortages in the governmentstockpiles of some of these special metals. I figured out that if youbought stock in Molycorp you got all of them. Then I also bought allthe others and they all got taken over. Every single one of them.
This is in 1976. I had the chart in my desk. One of the brokers inMax’s firm was a friend of Mario Gabelli, whom I had never met.Mario at that time was a broker at Loeb Rhodes. One day, Mariowalked over to my desk and took the chart and walked out. I saidwhere are you going with that? He took that chart of the complex ofcompanies. It was so funny. That’s how I met Mario.
Tanous: What was he doing in Max’s brokerage firm?
Price: Just visiting. The broker (his friend) knew I was doing someinteresting work. The broker said look at this. So Mario took it. [ForMario Gabelli’s take on this meeting see page 85.]
Tanous:One purpose of this book is to explore the riddle of the“efficient market theory.” [The efficient market theory, a strongerform of the “random walk” theory, is the proposition that investmentmarkets fully reflect all available public information almost instantly.The thesis raises doubts about any individual’s ability to gain consist-ent trading advantages by studying publicly available information.]In addition to active managers, I’m interviewing great academics andpassive investors. Now, what you just told us shows a process thatgoes completely counter to the efficient market theory. You discovered
35PETER J. TANOUS
certain facts, by being smart and digging hard, that were not at allreflected in the price of the stocks.
Price: I think it was in Lowenstein’s book on Buffett where he tellsabout how Buffett first went down to Washington and spent fourhours with the chairman of GEICO before he bought his first share ofGEICO. He then went on to buy the entire company. Now I'll tell you,you have to do your homework and kick the tires. It’s not the answersthat make you good in this business, it’s the questions you ask. If youask the right questions you will always find out more than the nextguy.
From the ’60s when Buffett first visited GEICO, and the ’70s whenwe did the Kawecki deal, to today, a lot has changed to make themarkets closer to efficient. The computers and information flows havecaused this. We went from the 286 to the 386, the 486, and the Pen-tium. We used to get Fed filings on some weekly sheet. Now we getthem electronically. First Call is a service that eliminates the wait toget hard copy of reports from brokers. Now we get it electronically.The delivery of information is so much faster. That has made themarkets somewhat more efficient but markets are not perfectly effi-cient. The academics are all wrong. 100% wrong. It’s black and white.
Tanous:! suppose you realize that to the academics people like youare just the outliers on the distribution curve.
Price: Throw the index funds in there. By law they’re efficient. Butif you take all the index funds out, take out the guys who have noclue as to what they’re doing, you’re left with a handful of guys whoknow what they’re doing, have a straightforward approach to valueinvesting, and everyone will tell you the market is not efficient. It’sleast efficient in places like bankruptcy investing. That’s why we doit. It’s least efficient in the minutes after a tender offer is announcedbecause people don’t know about it and the stocks can move aboveor below what the stock is going to be worth during the deal.
The market gets closer to being efficient when it involves morenormal, well-followed large cap stocks. [Large-cap is short for “largecapitalization.” Capitalization is the total market value of a company’sstock - the stock price x the number of shares, plus other financing.“Large-cap” usually refers to companies with total market value of$2 to $3 billion or more.] But just because thirty analysts followEastman Kodak doesn’t mean it’s efficiently priced. No one buys amarket. There are stocks in the market. Some are fully priced. Does
36INVESTMENT GURUS
that mean the market is efficient because a stock is fully valued? No.It means the stock is fully valued. Say there are six thousand decent-sized companies in the country. We own stock in two or three hundredof them. We own them because they’re too cheap.
Tanous:Let’s talk a bit about investment style. You are probablythe quintessential value manager by most standards. You are certainlyone of the most successful value managers in the country and maybein history. You also devote a fair amount of your assets to restructur-ing, which implies companies with serious problems. Can we talkabout why you would want to incur the risk of buying companies withserious problems?
Price: Because there’s less risk, if you do it properly. The New YorkStock Exchange used to have a rule that as soon as a company filedChapter 11 it was delisted. They’ve taken that rule away and thereare Chapter 11 stocks trading on the exchange. But back in the dayswhen those companies were delisted automatically, three marketmakers, of which we were one, traded not the stocks, but the bonds,over-the-counter. All the people who had margin accounts in thesestocks would have to sell them. Any institution that had wanted thedividend or the