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October 28, 1997 12:00 AM

Stock market volatility has been a boon to some managers, both...

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    Stock market volatility has been a boon to some managers, both internal and external. The correction in the Dow Jones industrial average - which was rising at midday - provided buying opportunities for many and vindication for at least one bear.

    New Mexico Permanent Fund, Santa Fe, used the market correction to buy the shares of about nine to 10 U.S. stocks, said Phil Archibeck, state investment officer for the $8.5 billion internally managed fund.

    Among the shares bought: WorldCom, Citibank, Dell Computer, Compaq Computer, Johnson & Johnson and Enron, said Mr. Archibeck. He did not specify sizes of purchases. The fund has about a 50% asset allocation to U.S. equities.

    Mr. Archibeck said overvaluation had put at least some of the desired shares out of price reach until the correction: ``We used the opportunity to buy what we liked.'' He expects the fund to buy more stock later in the week.

    New Jersey Division of Investment, Trenton, with $56 billion, also began a modest weeklong net buying program of U.S. stocks. During the week ending next Tuesday, the division expects to buy about 40 stocks and sell about 10, said Director Ronald Machold. He would neither name the shares involved nor put any dollar amount on the week's program.

    The moves are a ``modest change'' for the division, which has been a n et seller of U.S. stocks for the last 15 months, Mr. Machold said. `` We'd had a bad feeling about (the U.S.) market, and we'd been strategically repositioning ourselves.''

    The correction is one reason New Jersey decided to become a net buyer for U.S. stocks, but isn't making any ``major turns,'' said Mr. Machold.

    But at the $19 billion Tennessee Consolidated Retirement System, Nashville, CIO Tom Milne believes the U.S. market is still overvalued. Today, the fund was doing light trading, but was ``not making a new commitment of capital and won't do so anytime in the near term,'' he said.

    The fund, which has a 33% target to U.S. stocks, has a 30% allocation now, and, Mr. Milne said, ``to move us to an overweighted position, the Dow would have to be below 6,000.''

    And TAA manager PanAgora Asset Management is positioned for a further correction in U.S. stocks, said Edgar Peters, director-asset allocation.

    While prices are closer to where they should be, they're still overpriced, he said. ``P/es are where they were before the '87 crash,'' he said.

    PanAgora's portfolios recently have had a zero allocation to stocks, and with the recent drop in long-term interest rates, the firm has been moving money out of bonds as well, Mr. Peters said. PanAgora's portfolios have made up in the last few days about half of their underperformance for the year, and finished the last few days of market turmoil just about even on a relative basis, he said.

    Steven Goldstone, chairman and CEO of RJR Nabisco Inc., said today he would be open to a spinoff of the company's consumer products once things settle down from the June 20 tobacco settlement. He was speaking at the Investor Research Responsibility Conference in Washington.

    The $368 billion settlement was right for RJR Nabisco Inc., but it also will hurt the company, he said. The decision will cut earnings significantly; cause price increases that will lead to sharp decreases in volume in the industry; and curb the company's basic freedom to market to the consumer at a time when its market share has been declining anyway.

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