Reverse Spin – Hard sell: Strong Capital on the block

If Strong Capital Management Inc. were a house for sale, it might be described like this: “A real fixer-upper that comes with a past. Located in quiet neighborhood. As is.”

On Wednesday, the Menomonee Falls, Wis.-based company confirmed its place on the selling block. The sign went up one day after its founder, Richard S. Strong, resigned amid federal and state investigations into his trading activities.

The company said it had hired The Goldman Sachs Group Inc. of New York to look for a possible sucker … er, make that buyer. “A sale of the company is among the strategic alternatives we are considering,” company spokeswoman Stephanie Truog reportedly said.

“Nothing may come of this exploration, but it’s an opportune time to be looking at all the options, and that’s just what we’re doing.”

Of course, Strong better move fast or there won’t be anything left to sell. Investors pulled nearly $2 billion from mutual funds managed by Strong in November, marking the third consecutive month of outflows, according to data released Friday by AMG Data Services of Arcata, Calif., which compiles the weekly company-by-company flow figures for the industry.

“It doesn’t look good for Strong,” Robert Adler, president of AMG, reportedly said. “This is not an investor reaction; this is more likely a considered investor response.”

Invesco’s troubles

* It looks like INVESCO Funds Group Inc. is in hot water.

The Securities and Exchange Commission and New York Attorney General Eliot L. Spitzer on Tuesday filed separate civil-fraud charges against INVESCO, accusing the Denver-based company of violating its own rules by permitting A-list clients to engage in market timing, against company policy.

Also charged with fraud was Ray Cunningham, INVESCO’s CEO.

Of course, the big question is whether INVESCO’s name should be removed from the Denver Broncos football stadium. The Metropolitan Football Stadium District sold the naming rights to INVESCO in 2001 for $60 million. The district’s board is watching the situation, said spokesman Matt Sugar.

“They will continue to monitor,” he reportedly said. “Invesco’s been a good partner.”

Another casualty

* OK, who isn’t being charged with fraud?

On Thursday, the Securities and Exchange Commission filed illegal-trading charges against Dallas-based investment adviser MUTUALS.com Inc., and three of the company’s top executives. In a civil complaint, the SEC said MUTUALS.com had ripped off hundreds of mutual fund companies and their shareholders by actively engaging in both late trading and market timing for its customers.

The company apparently declined to comment but its website says: “Our mission is to build and maintain the most respected, reliable and trusted mutual fund company in the world.”

Construction up

* It’s all good, baby. Activity at U.S. factories grew at its fastest pace in 20 years in November, and spending on construction hit another record high in October, according to reports released Monday.

The Institute for Supply Management in Tempe, Ariz., said its manufacturing index had jumped to 62.8 in November, the highest since December 1983, from 57 in October.

“It’s pretty eye-popping. If you look at the components, everything is very positive,” said Stephen Stanley, senior markets economist at RBS Greenwich (Conn.) Capital Markets Inc. Meanwhile, construction spending in October posted its fourth straight record, rising 0.9%.

Closing Quote

“I wasn’t crazy about them before, and now I don’t trust them.”

Marilyn S. Steinmetz, a financial adviser at Money Matters, on Putnam Investments LLC. Page 27