Will investors tune in network marketers?

• Position: Network marketers Market America Inc and International Heritage Inc go public

They're not heavily traded. They have been in trouble with regulators. But network marketers Market America Inc. and International Heritage Inc. are public companies. That means John Q. Investor can buy in. The question is, should he?

Both went public through a back door - reverse mergers. You buy a dormant public company and start trading without the attention or cost of an initial offering. But because investment bankers don't set the price or establish trading, shares can fluctuate wildly and be hard to unload.

Network marketers have a ready-made market, though, selling stock the way they do products, to independent reps. More than 90% of Raleigh-based International Heritage's 755 stockholders are employees or reps.

Greensboro-based Market America is more interested in selling shares to professional investors. Robert Gardiner, portfolio manager for Wasatch Advisors Inc. in Salt Lake City, bought 30,000. After holding them six months, he sold them at a small loss. But he's still interested. "They make a lot of money." Market America's net income grew 28% in fiscal 1998, to $10.8 million. Still, its share price has stagnated at $5 to $6 the past year. Gardiner thinks it could double if analysts pick up the stock and it gets on NASDAQ.

The company has already drawn the attention of...