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Now That's A Piggy Bank


Inside Wall Street

NOW THAT'S A PIGGY BANK

It isn't your typical growth or turnaround stock, and it has never been a superstar. Yet some big players have recently been buying shares of BHC Communications, now at 54. Investor Mario Gabelli, for one, has accumulated a 19% stake in BHC, a broadcasting company that owns two TV stations and a 51.6% stake in United Television.

With assets worth $78 a share, according to Gabelli & Co. analyst Nancy Enslein, and a cash hoard of $1.6 billion, or $53 a share, the stock looks undervalued. As Warner Brothers' largest shareholder, BHC received some $1.5 billion in cash and securities when Warner merged with Time in 1989.

"But that's not the reason why some big players have been buying this stock," says veteran media analyst David Londoner of Wertheim Schroder. The disparity between the stock price and the company's assets is inviting, but the real attraction is BHC's "potential to use the $1.6 billion in liquid assets in a transaction that would provide a changed image and outlook for BHC," says Londoner. "It's really a play on Herb Siegel."

As chairman of Chris-Craft Industries, which owns 95% of BHC's voting stock through its 18 million Class B common, Siegel has had some big scores in the past. He invested in Paramount Pictures before Gulf & Western gobbled it up. And he bought into Twentieth Century-Fox in the 1970s before Marvin Davis acquired it. Siegel's big stake in Warner paid off handsomely, and BHC now owns Time Warner preferred C and D shares valued at $730 million.

With BHC debt-free and awash in cash, Siegel can do wonders. The betting is that Siegel will "acquire BHC or merge it with Chris-Craft to boost Chris-Craft's own asset value," says Gabelli's Enslein. Siegel would rake it in--and so would BHC shareholders.GENE G. MARCIAL


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