It’s not exactly Powerball, but the odds are better — and if you don’t win, you still won’t lose.
Washington credit unions are pitching a program to people who might be inclined to put their few spare dollars into a longshot lottery ticket rather than into a savings account.
The “Save to Win” plan promises monthly and annual drawings for cash prizes, with one entry ticket issued for each $25 deposit made into a 12-month certificate of deposit.
“The whole idea is to entice people to save,“ says Lee Wajnor, vice president of marketing at O Bee Credit Union in Olympia, who lobbied legislators to get the program approved in 2010. “People are creatures of habit,” and the lure of a lottery may be enough to nudge them into saving, he says.
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It’s also a way for credit unions to attract new customers at a time when interest rates are low.
Washington is the fourth state to allow such a lottery program. Lynn Heider, spokeswoman for the Northwest Credit Union Association, says there will be monthly drawings for a handful of $50 prizes, and a $5,000 prize in April 2014 for those who invested this April.
Like microlending, these “prize-linked savings” programs have become widespread in developing countries and have recently trickled up to the U.S. In this country, 8.2 percent of households have no bank accounts, and another 20 percent have an account but also rely on check-cashing firms, payday lenders and other high-cost financial services, says a 2011 Federal Deposit Insurance Corp. study.
Michigan debuted the first U.S. Save to Win program in 2009. It now has nearly 12,000 participants with total deposits of $28.4 million, for an average savings balance of $2,384, according to program organizers.
A Harvard Business School study found that “interest in prize-linked savings is greatest among people who do not have regular savings habits, who have little actual savings, who play lotteries extensively and who are optimistic about their futures.”
The six initial participants include Seattle’s Express Credit Union.
Patient no more, hedge fund bashes Flow Int’l
Sometimes even patient investors lose their patience.
After 12 years as a shareholder in Kent-based Flow International, which makes industrial water-jet-cutting systems, a Florida-based hedge-fund manager last week blasted the company’s management in a letter decrying its “abysmal performance” and demanding the board put it up for sale.
Flow is the world leader in its corner of the machine-tool industry — its water jets cut carbon-fiber composite plastic for both Boeing’s 787 and Airbus’ A350 — but the letter from Otter Creek Partners says its business strategy has been a costly failure.
Six years ago, during the search that led to hiring current CEO Charles Brown, another major shareholder urged it be sold instead because it was too small to justify the costs of being an independent public company. The board rejected that argument and since then the stock has lost more than two-thirds of its value.
Otter faults Brown for a “strange and quixotic journey to reframe the company as some sort of 1990s hot technology-growth entity.”
While rivals in the machine-tool sector used the recession to cut costs and “have rebounded with strong profit performance,” Flow spent money on growth initiatives that haven’t paid off, according to Otter, and now ranks “at the bottom in virtually every peer company performance metric.”
The company’s sales for the past nine months rose 6 percent to $201 million, while net income was up 2 percent to 14 cents per share. The company last year had 640 full-time employees, two-thirds in the U.S.
Its recent growth initiatives included an investment in a Chinese manufacturer of lower-tier water jets and a deal to buy a U.S. rival, which ultimately unraveled and cost the company millions.
Flow officials didn’t return calls about the letter. Though the hedge fund describes itself as a longtime shareholder, it built up much of its current 5.1 percent stake in 2011.
Pinnacle Foods IPO may leave sour taste in Tacoma
The executives of Pinnacle Foods rang the opening bell at the New York Stock Exchange on Thursday as the maker of Birds Eye, Duncan Hines, Vlasic, Van de Kamp’s and many other frozen, pickled or otherwise processed edibles celebrated its initial public offering of stock.
One place where the IPO was probably not being celebrated was Tacoma, where Pinnacle in 2011 rang the death knell for the Nalley’s plant that, despite a long decline, still employed 160. Its well-known Nalley’s chili is now produced in Iowa.
Pinnacle, controlled by the Blackstone private-equity fund, went public at $20 and ended its first trading day up 11 percent.
It’s the third largest IPO this year, raising $580 million.
Closing Nalley’s didn’t leave Pinnacle without a local footprint. It also owns chip company Tim’s Cascade Snacks.
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