WOULD YOU LIKE STOCK WITH YOUR PLEATED-FRONT KHAKIS?
SITE ALLOWS SHOPPERS TO SPEND REBATES ON SHARES;
OTHERS LET YOU INVEST DIRECTLY WITH RETAILERS
By Dolores Kong
08/06/2000
The Boston Globe
Retailers want you to shop on the Internet for
everything from lingerie to toys, but now there's new
merchandise available on the Web - stock in the very
companies from which you make your online purchases.
The choices for online stock purchase are ever
expanding, turning the Internet into a virtual mall
not only for consumers, but also for investors.
In the latest twist, a Web site called
www.stockback.com is letting people combine shopping
at 85 online retailers with buying shares in a mutual
fund investing in those and other stocks. The way it
works: Cash rebates on purchases made through
stockback.com's retail partners are deposited into
your account, which you can then use to buy mutual
fund shares.
"We want to turn ordinary consumers into owners of the
companies they patronize," said Timothy Parrott,
president and a founder of the New York-based company.
"It's bringing investing to the masses."
Among the companies with an online presence that have
already signed up for the program, which will offer up
to 20 percent cash rebates convertible into Stockback
fund shares: Eddie Bauer, Land's End, Barnes & Noble,
Sharper Image, and Toys "R" Us.
Separate from Stockback, you can enroll online to buy
stock directly in a growing list of retailers,
including CVS, Sony, Radio Shack, Kmart, or Intimate
Brands (which sells its wares through Victoria's
Secret and Bath & Body Works), through an individual
retailer's Web site, www.netstockdirect.com, or
www.StockPower.com.
There are also Web sites that let you purchase shares
bit by bit in all types of publicly traded companies,
whether or not they're online retailers and regardless
of whether they offer their own stock purchase plans:
www.BUYand HOLD.com and www.ShareBuilder.com.
And, of course, you can buy stocks online through such
brokers as ETrade, Ameritrade, Charles Schwab & Co.,
Fidelity Investments, and Vanguard.
Here's a summary of some of the Web sites at which you
can shop for company stock: www.stockback.com:
Proclaiming "there's a new way to invest - it's called
shopping," this site promises to let you put cash
rewards from online purchases at selected retailers
into a mutual fund that invests in those and other
companies.
While the Stockback fund still awaits approval from
the Securities and Exchange Commission, people already
can shop and start building up their cash rebate
accounts in anticipation, according to Parrott. The
company's filings with the SEC say the fund's
objective is to provide long-term capital appreciation
by investing in the publicly traded stock of
participating retailers and other stocks the portfolio
managers believe will increase in value. The company's
filings say the fund may also invest up to 30 percent
of its assets in foreign companies.
And while the fund will waive its management fees for
a year and will charge no upfront load, it will impose
a 2 percent fee if you redeem shares in less than one
year and a 1 percent fee if you redeem in less than
two years. The company will soon announce it has
signed an agreement with Merrill Lynch to be the
subadviser for the fund.
You must become a member by completing an online
investment account application and will be asked to
agree to receive electronic delivery of all fund
statements and reports. Cash rebates from purchases
will be deposited directly into your account. You must
have at least $10 in your account before you can buy
shares in the mutual fund. And if you request the cash
be sent to you instead, a check processing fee of up
to $5 will apply.
So the decision to shop or invest at this site depends
on whether you like the retailers and whether you
think the companies in which the fund invests will
make money.
The fund will always own at least some shares in the
retail partners that are publicly traded, no matter
what the firms' financials look like. "They will be
represented in the fund if they are a partner. The
balancing is all up to Merrill Lynch. If it finds they
are not sound in various ways, they will not be
heavily weighted in the fund," Parrott said. "That's
what the merchants want as well. You wouldn't want to
be a merchant that forces consumers to buy stock if it
wasn't performing well."
Stockback.com is not the simplest or most efficient
way to buy stock in companies you like, but the site
may be of interest to shopaholics who otherwise can't
invest or to people who like the notion of getting
cash rebates and mutual fund shares as they shop.
- www.netstockdirect.com: Saying it's "the source for
direct investing," this free site features information
on more than 1,500 stock plans, nearly 600 of which
allow you to buy your first shares directly from the
company, and the rest of which require you to already
own some shares in your name and reinvest dividends.
About 50 of the plans allow you to enroll online
through Netstock Direct.
Among the top 10 requests for investment information,
according to a recent review of the site: General
Electric, IBM, Nokia, and Pfizer.
The site allows you to search for stock plans a number
of ways, including by company name, whether they offer
automatic deductions from your bank account, or
whether they offer an Individual Retirement Account
plan. And it allows you to compare plan details, such
as minimum investment and investment fee. Some plans
feature minimums of $50 to $250, and some charge no
fee or just a few dollars.
So if you like the wares sold by Victoria's Secret or
Bath & Body Works, you can enroll online in the stock
purchase plan for Intimate Brands, owner of those
retailers, through this site. Or if your tastes run to
products sold by Target, Campbell Soup, Caterpillar,
or Goodyear, you can enroll here for those stocks
plans.
- www.StockPower.com: On its "splash" page that comes
up first, this site targets individual investors with
the phrase "You know their products and services. Now
invest directly with the companies you trust." And it
uses a new word to describe customers who are also
investors - "investomers."
Operating under the same idea as netstockdirect.com,
but limited to direct stock purchase plans, this free
site provides information on nearly 600 plans and
online enrollment in 10 corporate partners' plans,
including Compaq, Kmart, and Radio Shack.
What this site has and netstockdirect.com doesn't: a
chart showing 50-day and 200-day moving averages for
each stock, as well as the previous day's closing
price.
- www.BUYandHOLD.com and www.ShareBuilder.com: Both of
these sites are based on the same concept - let folks
with as little as $20 to $50 to invest on a regular
basis buy shares in thousands of companies for under
$3 per transaction. Unlike traditional brokerages,
these sites feature no stock recommendations, online
research, or financial planning advice.
BUYandHOLD.com allows purchases of as little as $20 on
a weekly, monthly, or quarterly basis for a $2.99
transaction fee. Purchases and sales are executed
twice a day, morning and afternoon, and dividends are
reinvested at no charge.
ShareBuilder.com, part of the same company that owns
netstockdirect.com, charges $2 if you buy shares on a
monthly basis, no minimum required. The trades are
executed only once a week, but you can pay $19.95 for
each transaction if you want to buy and sell on a
real-time basis. There is no charge for dividend
reinvestment.