Case History Aetna Maintenance Co

The first part of this history is reproduced from our 1965 edition, where it appeared under the title "A Horrible Example." The second part summarizes the later metamorphosis of the enterprise.

We think it might have a salutary effect on our readers' future attitude toward new common-stock offerings if we cited one "horrible example" here in some detail. It is taken from the first page of Standard & Poor's Stock Guide, and illustrates in extreme fashion the glaring weaknesses of the 1960-1962 flotations, the extraordinary overvaluations given them in the market, and the subsequent collapse.

In November 1961, 154,000 shares of Aetna Maintenance Co. common were sold to public at $9 and the price promptly advanced to $15. Before the financing the net assets per share were about $1.20, but they were increased to slightly over $3 per share by the money received for the new shares.

The sales and earnings prior to the financing were:

Year Ended


Net for


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