SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 18)*
Preferred Income Management Fund Incorporated
(Name of Issuer)
Common Stock
(Title of Class of Securities)
74037Q10
(CUSIP Number)
Thomas R. Stephens, Esq.
Bartlit Beck Herman Palenchar & Scott
511 Sixteenth Street, Suite 700
Denver, Colorado 80202
(303) 592-3100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 23, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box .
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
Cusip No. 74037Q10
Page 1 of 15
*SEE INSTRUCTIONS BEFORE FILLING OUT!
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Horejsi, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b)
SEC USE ONLY
3
SOURCE OF FUNDS*
4
WC OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(D) OR 2(E)
CITIZENSHIP OR PLACE OF ORGANIZATION
6
South Dakota
SOLE VOTING POWER
NUMBER OF 7
SHARES
2,073,430
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
0
SOLE DISPOSITIVE POWER
EACH 9
REPORTING
2,073,430
SHARED DISPOSITIVE POWER
PERSON 10
WITH
0
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,073,430
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
12
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
22.0%
TYPE OF REPORTING PERSON*
14
CO
Cusip No. 74037Q10
Page 2 of 1 Pages
*SEE INSTRUCTIONS BEFORE FILLING OUT!
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Stewart R. Horejsi
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2
(a)
(b)
<PAGE>
SEC USE ONLY
3
SOURCE OF FUNDS*
4
Not applicable
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(D) OR 2(E)
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
SOLE VOTING POWER
NUMBER OF 7
SHARES
0
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
0
SOLE DISPOSITIVE POWER
EACH 9
REPORTING
0
SHARED DISPOSITIVE POWER
PERSON 10
WITH
0
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
0
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0%
TYPE OF REPORTING PERSON*
14
IN
Cusip No. 74037Q10
Page 3 of 1 Pages
*SEE INSTRUCTIONS BEFORE FILLING OUT!
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Lola Brown Trust No. 1B
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2
(a)
(b)
SEC USE ONLY
3
4 SOURCE OF FUNDS*
WC OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(D) OR 2(E)
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Kansas
SOLE VOTING POWER
NUMBER OF 7
SHARES
1,581,665
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
0
SOLE DISPOSITIVE POWER
EACH 9
REPORTING
1,581,665
SHARED DISPOSITIVE POWER
PERSON 10
WITH
0
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,581,665
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
16.8%
TYPE OF REPORTING PERSON*
14
OO
Cusip No. 74037Q10
Page 4 of 1 Pages
*SEE INSTRUCTIONS BEFORE FILLING OUT!
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Badlands Trust Company
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2
(a)
(b)
SEC USE ONLY
3
SOURCE OF FUNDS*
4
WC OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
CITIZENSHIP OR PLACE OF ORGANIZATION
6
South Dakota
SOLE VOTING POWER
NUMBER OF 7
SHARES
12,735
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
0
SOLE DISPOSITIVE POWER
EACH 9
REPORTING
12,735
SHARED DISPOSITIVE POWER
PERSON 10
WITH
0
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
12,735
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
.13%
TYPE OF REPORTING PERSON*
14
CO
Cusip No. 74037Q10
Page 5 of 1 Pages
*SEE INSTRUCTIONS BEFORE FILLING OUT!
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Stewart R. Horejsi Trust No. 2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a)
(b)
SEC USE ONLY
3
SOURCE OF FUNDS*
4
Not applicable
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(D) OR 2(E)
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Kansas
SOLE VOTING POWER
NUMBER OF 7
SHARES
0
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
0
SOLE DISPOSITIVE POWER
EACH 9
REPORTING
0
SHARED DISPOSITIVE POWER
PERSON 10
WITH
0
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
0
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0%
TYPE OF REPORTING PERSON*
14
OO
Page 6 of 1
Amendment No. 18 to Statement on Schedule 13D
This amended statement on Schedule 13D relates to
the Common Stock, $.01 par value per share
(the "Shares") of Preferred Income Management Fund Incorporated, a
Maryland corporation (the "Company").
Items 2, 3, 4, 5 and 6 of this statement, previously filed by
(i) Horejsi Enterprises, Inc. ( HEI ), The
Lola Brown Trust No. 1B (the "Brown Trust") and Badlands Trust
Company ( Badlands ), each as the direct
beneficial owner of Shares, and (ii) Stewart R. Horejsi,
Larry L. Dunlap, and Stewart R. Horejsi Trust
No. 2 (the "Stewart Horejsi Trust"), by virtue of the
relationships described previously in this
statement, are hereby amended as set forth below.
Item 2. Identity and Background.
No change except for the addition of the following:
On December 11, 1997, Badlands replaced Mr. Horejsi as a trustee of
the Brown Trust and the Ernest Horejsi Trust No. 1B, and Badlands replaced
Mr. Dunlap as a trustee of the Stewart Horejsi Trust. On December 15,
1997, HEI merged into Horejsi, Inc., a South Dakota corporation ("HI"),
with HI surviving the merger. As a result of such merger, HI acquired all
Shares previously held by HEI.
As a result of transactions described above, this statement is no
longer filed on behalf of HEI and Mr. Dunlap. This statement is filed on
behalf of the Brown Trust, Badlands, the Stewart Horejsi Trust, HI and Mr.
Horejsi, who are referred to in this statement as the Reporting
Persons.
The directors of HI are Mr. Stephen C. Miller, Mr. John Raforth, and
Ms. Susan Ciciora. The executive officers of HI are Mr. Miller, President
and Treasurer, and Ms. Stephanie Kelley, Secretary.
(b) The business address of HI is 122 South Phillips Avenue, Suite
220, Sioux Falls, South Dakota 57104.
(c) HI is a holding company engaged through its affiliates in the
retail sale of welding consumables, equipment and gases, the wholesale
sale of bulk gases, leasing of cylinders to various wholesale and retail
customers, and the financing of such activities.
(d) Neither HI nor, to the best knowledge of the Reporting
Persons, any officer or director of HI has been convicted in a criminal
proceeding in the past five years (excluding traffic violations or similar
misdemeanors).
(e) During the past five years, neither HI nor, to the best
knowledge of such persons, any officer or director of HI was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws of finding any violation with respect to such laws.
HI is a South Dakota corporation. All of the officers and directors
of HI are citizens of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
No change except for the addition of the following:
HI acquired 2,071,430 of the Shares held by it as a result of the
merger of HEI into HI. The total amount of funds required by HI to
purchase the Shares purchased in the open market as reported in Item 5(c)
was $31,289.90 (including commissions). Such funds were provided by HI's
cash on hand and margin borrowings under accounts maintained by HI (as
successor to HEI) with Bear Stearns Securities Corp. and by HI and related
parties with Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
previously reported in this statement on Schedule 13D.
The total amount of funds required by the Brown Trust to purchase
the Shares as reported in Item 5(c) was $988,934.70. Such funds were
provided by the Brown Trust's cash on hand and margin borrowings under
accounts maintained by the Brown Trust with Merrill Lynch International
Bank Limited, as previously reported in this statement on Schedule 13D.
Item 4. Purpose of Transaction.
No change except for the addition of the following:
A meeting of the Company's board of directors was held on
January 23, 1998. At the meeting, Mr.
Horejsi advised the board that he believed that the Company should take
several steps:
The Company's objective should be to maximize the after
tax return received by the Company's
shareholders. In view of the recent changes in the Federal
income tax code which have lowered
taxes on long term capital gains, the Company should attempt
to increase after tax returns to
shareholders by changing the Company's investment focus to
emphasize capital gains rather than
current income, thereby reducing taxes paid by the Company's
shareholders. Specifically, Mr.
Horejsi suggested that the Company invest a significant
portion of its portfolio in a small
number of common stocks that offer good long term investment
prospects, including common stocks
of troubled companies. In addition, the Company should
consider investing in other investment
companies, subject to legal restrictions. Finally, the
Company should retain and reinvest the
maximum amounts of income and gains that can be retained,
consistent with tax requirements.
In connection with the change of the Company's investment focus,
the Company should dispose of a
portion of its preferred stock portfolio. Recent
changes in the tax laws have permitted
corporations owned by trusts to elect Subchapter S status,
thereby eliminating the appeal of the
deduction for preferred stock dividends received for such
corporations. It is also possible that
Congress will enact legislation to repeal or limit the
corporate dividends received deduction
for preferred stocks. If this occurs, the market
value of the Company's preferred stock
portfolio could be adversely affected. Sale of a
significant portion of the portfolio would
reduce this risk to the Company and its shareholders.
Mr. Horejsi noted that HI may elect to be
taxed as a Subchapter S corporation in the future, in which
case HI would not be able to use the
dividends received deduction.
Sale of a significant portion of the Company's preferred
stock portfolio and reinvestment of the
proceeds in common stocks would be likely to reduce the
dividend income received by the Company
and consequently reduce the dividends paid by the Company
to its shareholders, which may reduce
current returns in the near term. However, if the
Company is able to invest in common stocks
that increase in value, that increase in value should
be reflected in higher market prices for
the Shares. Shareholders of the Company who hold Shares
for the long term will be able to take
advantage of lower federal income taxes on long term
capital gains as opposed to higher taxes on
dividend income. Mr. Horejsi noted that investing
a significant portion of the Company's
portfolio in a small number of common stocks may
significantly increase the volatility of the
price of the Shares.
The Company should change from a diversified investment
company to a non-diversified investment
company.
The Company should appoint a chief executive officer who
is unaffiliated with the Company's
investment advisor and change the Company's name to reflect
its new investment focus.
The Company should adopt a policy to prohibit its
directors from receiving fees from the
Company's investment advisor or any companies controlled
or advised by the Company's investment
advisor. Currently, all directors other
than Mr. Horejsi receive compensation either from
Flaherty and Crumrine, the Company's investment
advisor, or from Preferred Income Fund
Incorporated and Preferred Income Opportunity Fund
Incorporated, both of which are also advised
by Flaherty and Crumrine.
Mr. Horejsi indicated that he believed Flaherty and
Crumrine, should continue to advise the
Company with respect to the preferred stock and fixed
income portion of the Company's portfolio, but
that a company controlled by Mr. Horejsi would be better
suited to implement a new investment focus for
the Company than Flaherty and Crumrine.
The Company's board of directors indicated that they would
review Mr. Horejsi's suggestions but
did not take action on any of the suggestions.
In view of the board's response, Mr. Horejsi advised the board
that the Reporting Persons will
consider whether they should take a more active role in the Company's
management to protect the value of
their investment. Mr. Horejsi also advised the board
that, while no decision has been made, the
Reporting Persons may consider, among other things, soliciting
proxies in connection with the Company's
annual meeting of shareholders with respect to election of directors
or other matters.
HI acquired the Shares described in Item 5(a) of this
statement as a result of its merger with
HEI and purchases of Shares. HI purchased the Shares described
in Item 5(c) of this statement in order
to increase its equity interest in the Company. Depending
upon their evaluation of the Company's
investments and prospects, and upon future developments
(including, but not limited to, performance of
the Shares in the market, the effective yield on the Shares,
availability of funds, alternative uses of
funds, and money, stock market and general economic conditions),
any of the Reporting Persons or other
entities that may be deemed to be affiliated with HI, the
Brown Trust, Badlands or the Stewart Horejsi
Trust may from time to time purchase Shares, and any of the
Reporting Persons or other entities that may
be deemed to be affiliated with HI, the Brown Trust, Badlands
or the Stewart Horejsi Trust may from time
to time dispose of all or a portion of the Shares held
by such person, or cease buying or selling
Shares. Any such additional purchases or sales of the
Shares may be in open market or privately-
negotiated transactions or otherwise. However, if the
Reporting Persons acquire additional Shares, the
Reporting Persons do not, at this time, intend to more Shares
than would be necessary to acquire control
of the Company, which the Reporting Persons believe is less
than 50% of the outstanding Shares.
Item 5. Interest in Securities of the Issuer.
No change except for the addition of the following:
(a) HI is the direct beneficial owner of 2,073,430
Shares, or approximately 22.0% of the
9,416,743 Shares outstanding as of May 1, 1997, according to
information contained in the Company's 1997
proxy statement. By virtue of the relationships reported in
this statement, Mr. Horejsi may be deemed
to share indirect beneficial ownership of the Shares
directly beneficially owned by HI. Mr. Horejsi
disclaims all such beneficial ownership.
The Brown Trust is the direct beneficial owner of
1,581,665 Shares, or approximately 16.8% of
the 9,416,743 Shares outstanding as of May 1, 1997, according
to information contained in the Company's
1977 proxy statement. By virtue of the relationships
reported in this statement, Mr. Horejsi may be
deemed to share indirect beneficial ownership of the
Shares directly beneficially owned by the Brown
Trust. Mr. Horejsi disclaims all such beneficial ownership.
By virtue of the relationships and transactions
described in this statement, the Reporting
Persons may be deemed to constitute a group. HI disclaims
beneficial ownership of Shares directly
beneficially owned by the Brown Trust and Badlands, the Brown
Trust disclaims beneficial ownership of
Shares directly beneficially owned by the HI and Badlands,
and Badlands and the Stewart Horejsi Trust
each disclaim beneficial ownership of Shares directly beneficially
owned by the Brown Trust and HI.
(b) HI has the direct power to vote and direct the
disposition of the Shares held by it.
By virtue of the relationships previously described in this
statement, Mr. Horejsi may be deemed to
share the indirect power to vote and direct the disposition of
the Shares held by HI.
(c) The table below sets forth purchases of
the Shares by HI since November 24, 1997. All
of such purchases were effected by HI on the New York Stock Exchange.
Approximate Price
Date Amount of Shares Per Share
(exclusive of commissions)
12/22/97 1,000 $15.625
12/23/97 1,000 $15.625
The table below sets forth purchases of the Shares by the
Brown Trust since November 24, 1997.
All of such purchases were effected by the Brown Trust on the New
York Stock Exchange.<PAGE>
Approximate Price
Date Amount of Shares Per Share
(exclusive of commissions)
12/16/97 20,000 $15.81
12/17/97 25,000 $15.81
12/18/97 10,000 $15.9375
12/18/97 200 $15.875
12/19/97 7,200 $15.9375
HI acquired 2,071,430 of the Shares held by it pursuant to the
merger with HEI.
(d) HI has the right to receive and the power to direct the
receipt of dividends from, and
proceeds from the sale of, the Shares held by it.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
No change except for the addition of the following:
As a result of its merger with HEI, HI succeeded to all of the
rights and obligations under HEI's contracts, arrangements,
understandings and relationships as previously described in this
statement.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in
this statement is true, complete and correct.
Date: January 26, 1998
/s/ Stewart R. Horjsi
Stewart R. Horejsi
Stephen C. Miller, as President of Horejsi,
Inc. and as President of Badlands Trust
Company, trustee of The Lola Brown Trust No.
1B, and trustee of the Stewart R. Horejsi
Trust No. 2.
