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Business Briefs

Reported by Star-Bulletin staff & wire

Monday, December 18, 2000

Signature closes deal for Windward theater

Signature Theatres has closed on long-awaited leasing arrangements for a new 10-screen cinema at Windward Mall. Sources close to the deal said the lease, reached with mall operator Pauahi Management Corp. last week, is for roughly $10 million and carries a term of 10 years. Pauahi Management is a for-profit subsidiary of Kamehameha Schools. The theater could open as early as May, and will be located in 45,000 square feet of space vacated by J.C. Penney in 1998. "It'll provide the Windward community with a first-class cinema experience," said Fred Noa, vice president of Chaney Brooks & Co.'s commercial division. "It will create significant traffic."

Earlier this year, Pauahi Management had picked Signature's competitor Consolidated Amusement Co. to build a 10-plex theater in the same space. But Consolidated backed out, saying the shell built for the theaters was not big enough.

Signature Theatres also has an 18-plex at Dole Cannery and a 12-plex at Pearl Highlands Center.

eToys' stock plunges on revenue outlook

SANTA MONICA, Calif. -- eToys Inc. shares tumbled 72.7 percent today after the Internet toy retailer said it won't meet fiscal third-quarter sales forecasts and has just four months of cash left. eToys' stock fell 75 cents to 28 cents after falling as low as 25 cents. Share of the Santa Monica, Calif.-based company were sold to the public for $20 each in May 1999. The firm said Friday that its sales in the quarter ending Thursday will be $120 million to $130 million, less than its forecast of $210 million to $240 million. eToys also hired Goldman, Sachs & Co. to explore options, including a merger or asset sale.

In other news . . .

SAN JOSE Calif. -- JDS Uniphase Corp. said it will complete its $20.5 billion acquisition of rival SDL Inc. in January, a month later than projected.

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Of Mutual Concern

News for mutual fund investors

Fidelity reopens two of its biggest funds

BOSTON -- Fidelity Investments, the biggest U.S. mutual fund company, has reopened its second- and third-biggest mutual funds to new investors, 2-1/2 years after closing them.

Fidelity has opened its $39.2 billion Contrafund and its $39.8 billion Growth & Income Portfolio.

"When we partially closed these two funds in 1998, our goal was to stabilize cash flows so that the managers could most effectively direct investment strategies for the benefit of fund shareholders," Robert Pozen, president of Fidelity Management & Research Co., said.

Contrafund is down 9.2 percent this year through Friday, outperforming the Standard & Poor's 500 index, which has fallen 10.7 percent. Growth & Income Portfolio is down 2.8 percent. William Danoff has managed the Contrafund since 1990 and Steven Kaye has managed the Growth & Income Portfolio since 1993.

Some Janus investors face big capital gains

DENVER -- Some Janus Capital Corp investors will pay hefty capital gains distributions this year on money-losing funds.

The hardest hit will be holders of the Janus Venture Fund, which is expected to pass on distributions of $16.23 per share. That amounts to roughly 26 percent of the fund's net asset value of $62.73 as of Nov. 30. The fund is down 44.6 percent year to date through Friday.

The capital gains were incurred during the first quarter when the Venture Fund's portfolio managers sold off fast-growing technology stocks that no longer fit the fund's small-cap slant.

"A lot have simply graduated out of the small-cap arena," said Janus spokeswoman Shelley Peterson.

When a mutual fund sells stocks, the capital gains resulting from those sales must be passed on to shareholders. Investors participating in IRAs, 401(k) plans or other nontaxable accounts don't receive those distributions. At least 35 percent of all mutual fund assets are held in nontaxable accounts, according to the Investment Company Institute.

Mutual fund companies typically notify investors in taxable accounts of the distributions they'll have to pay before January. Janus will pay distributions Dec. 15 to shareholders of record as of Dec. 14. Nearly all of Janus' equity funds will pay some kind of distribution, but the amounts vary widely.

The Janus Fund, the Janus Mercury and the Janus Worldwide will all pay distributions of at least $4 a share. Others such as the Orion and the Global Life Sciences fund will pay just a few cents. Global Life Sciences investors get the benefit of low distributions coupled with strong performance. The fund is up 25.8 percent for the year through Friday.

Majority of managers outpacing S&P 500

BOSTON -- More than half the mutual funds run by managers who pick their own stocks are on pace to beat the Standard & Poor's 500 Index in 2000, the first time in seven years a majority of actively managed funds outperformed that benchmark.

For the year through Nov. 30, 58 percent of actively managed U.S. diversified stock funds have beaten the S&P 500, according to a study by Kanon Bloch Carre, a Boston-based retirement plan consulting firm.

Over the past 12 months through Nov. 30, 69 percent of actively managed funds beat the index. The Vanguard 500 Index Fund, which seeks to replicate the S&P's return, declined 4.1 percent for the same period, while the average fund in the survey gained 1.84 percent.

The performance ends a winning streak by index funds driven by large-cap growth stocks. Before the gains of the past five years, active funds had beaten managers who tried to track benchmark indexes.

"Large-cap growth stocks for most of the past five or six years drove the market until the Nasdaq market exploded last year," said Burton Greenwald, a Philadelphia-based mutual fund consultant. "And the S&P 500 Index just beat the hell out of most individual managers."

Foster Friess, who runs the almost $5.9 billion Brandywine Fund, said unlike 1998, when "fundamentals didn't matter," and 1999 when "valuations didn't matter," investors are now finding both do matter.