Newspaper article THE JOURNAL RECORD

Sin Just Got a Lot Cheaper: The Bargain Morgan FunShares

Newspaper article THE JOURNAL RECORD

Sin Just Got a Lot Cheaper: The Bargain Morgan FunShares

Article excerpt

CLEVELAND -- Morgan FunShares Inc., a closed-end mutual fund that invests in sex, booze, gambling and smoke stocks, is a bargain.

It's selling at a 15 percent discount to the value of the stocks it holds.

That makes it a buy according to some analysts.

Patrick Winton, editor of the Closed End Fund Digest, based in Santa Barbara, Calif., recommended investors purchase the fund in his most recent newsletter. Why does he like FunShares? Simply the numbers -- the fund's net asset value, or value of the stocks in the fund, has jumped about 13.5 percent so far this year, more than twice the Standard & Poor's 500 Index.

The $6 million fund was founded two years ago by Burton Morgan, 80. He spent much of his career manufacturing Band-Aids for Johnson & Johnson, before starting a $500 million adhesive paper company, then branching into venture capital, buying a 2,000 acre soybean and corn farm, and starting his own mutual fund.

The idea behind the fund is to buy companies that make products "you think you can't live without," said Morgan.

That means small ticket items that people won't stop buying even if there's a depression: Band-Aids, toothpaste, toilet paper, sanitary napkins, alcohol, tobacco and chewing gum.

This search for what Morgan calls "habit forming" products leads him to buy cigarette makers Philip Morris Companies Inc. and RJR Nabisco Holdings Corp., brewer Anheuser-Busch Cos., distiller Seagrams Co Ltd., gambling companies Circus Circus and International Game Technology, Wm. Wrigley Jr. Co. and toilet paper maker Kimberly- Clark Corp.

Morgan has made his miscalculations, but he vows not to sell any company he's bought.

Frederick's of Hollywood Inc. "was a mistake," he said of the racy lingerie retailer. "If you lose your job you aren't going to buy lace undies, but you'll still buy cigarettes and whisky."

He also has doubts about Carter-Wallace, which makes Trojan brand condoms. "Condoms aren't that habit forming," he said. "Though I guess they should be."

Morgan actually started investing for himself and a few friends about 15 years ago. Their biggest holding was RJR, so they called the portfolio Sin Shares as a joke, said Morgan, who doesn't smoke and only drinks "on Saturday nights" with his wife of 55 years. …

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