INTERNET COMPANY AIMS TO HELP PEOPLE BECOME DIRECT INVESTORS.

Byline: Warren Wilson Seattle Post-Intelligencer 

Trend No. 1: Investors are weaning themselves from their brokers, saving money by doing their own research and buying stocks directly from the issuing companies - commission-free.

Trend No. 2: Millions are flocking to the Internet, mining the vast public computer network of networks for everything from mystery stories to magic tricks.

In the zone where the two trends converge, Mark Davis figures there's a business opportunity. His new Seattle-based company, Netstock Direct, is apparently the first on the Internet focused on giving people the necessary tools - instructions, earnings reports, order forms, etc. - to become direct investors.

Davis and Netstock Direct are collaborating with two other groups, the Securities Transfer Association and the Direct Stock Purchase Plan Clearinghouse, to foster a new investment arena that they say rewards both investors and the companies whose stocks they purchase.

Investors save money and may buy fractional shares of blue-chip stocks that would be too expensive if purchased by the share, say direct-purchase proponents.

The companies, in turn, benefit from individual shareholders who take a longer view of their performance and prospects than do institutional investors and stock analysts.

``Investors are becoming dissatisfied with the results so-called professional money managers are providing,'' said James Volpe, vice president with First Chicago Trust Co. and director of a direct-investor information and education effort run by the Securities Transfer Association. He is advising Davis' new company.

Direct purchasing is ``more cost-effective'' than buying through a broker, Volpe said. And through Netstock's site on the World Wide Web, the necessary information is available ``immediately - 24 hours a day, seven days a week.''

Stock brokers have little reason to embrace a system that doesn't pay commissions, but at least one major industry organization says direct purchase plans have their place.

``Anything that helps American companies raise capital is a good development,'' said Marc Beauchamp, spokesman for the National Association of Securities Dealers. Direct purchase plans will appeal to many, especially the ``information and financial elite who prefer to do it themselves.''

But that's a limited group, Beauchamp said. Most people planning for retirement or college expenses need advice in crafting a broader strategy that includes not just stocks but bonds, money-market funds and other securities. ``For the vast majority of people, I think there's going to be a need for investment professionals to help them,'' he said.

Direct-purchase programs haven't had a discernible impact on the brokerage business, he said. NASD membership is at record levels - 524,000 registered individuals as of the end of June, and more than 5,500 member firms.

But direct-purchase plans have the steeper growth curve.

Three or four years ago, Volpe said, just six U.S. companies sold their shares directly to the public. Today the number stands at 130, and he predicts it will reach 2,400 or more over the next couple of years.

When Exxon Corp. began its direct sales program in 1992, it received 50,000 phone calls and opened 25,000 new accounts in the first month, according to author and newsletter editor Chuck Carlson in his new book, ``No-Load Stocks.''

No-load stock programs have existed for several years, Carlson said, but they stagnated until recently because it took up to two years to get a plan approved by the U.S. Securities & Exchange Commission.

The new era began Dec. 1, 1994, when the SEC issued rulings that in effect approved two blueprint programs, Carlson said. Now, a company can launch a no-load plan in as little as eight weeks by modeling it on one of the blueprints.

``That's really what has opened up the floodgate,'' Carlson said.

No-load programs are similar to another increasingly popular investment vehicle called the DRP or DRIP, for dividend reinvestment plan.

The only real difference is the enrollment mechanism, Carlson said. To join a DRIP, the investor purchases the first share of stock through a broker. In a no-load program, even the first share may be purchased directly from the issuing company.

After that, the two types have some significant traits in common. For example, they are based on dollar amounts and fractional numbers of shares. If $50 buys 1.278 shares, the investor's account is credited with 1.278 shares.

Many programs require an initial minimum investment of $250 and limit subsequent purchases to at least $50 a month. Some set annual maximums. Many allow automatic investment via electronic funds transfer from the investor's bank.

Until recently, a potential investor had to call each company individually to learn the details of its direct-purchase plan. The direct-stock Clearinghouse, a joint venture of NorthStar Financial, which publishes Carlson's DRIP Investor newsletter, and Shareholder Communications Corp., maintains a 24-hour toll-free number, [phone], where an investor may request information by mail on any participating company.

Netstock Direct is working with the Clearinghouse and the Securities Transfer Association to provide the same information at its Web site (http://www.netstockdirect.com) - minimums and maximums, prospectuses and earnings reports - for immediate download.

It also plans to offer enrollment forms that a prospective investor can download, print, fill out and mail to the issuing company, along with a check, to join the program.

The first enrollment form it will list is that of Amoco Corp., the Chicago-based crude oil and natural gas company. The form is expected to be available in the next several days.

A key feature, Davis said, is that Netstock Direct's service is free to the investor. Netstock is still working out details of how it will charge for its service, he said, but it will be based on ``activity we generate for the company,'' such as requests for information or enrollment forms, as well as actual enrollments.

No-load funds aren't all completely cost-free. Many charge nominal administrative fees for enrollment, dividend reinvestment and purchase or sale of shares. But according to Business Week magazine, ``Any fees in a direct purchase plan are almost always lower that what you'll pay at a brokerage firm.''