Peachtree Securities

Peachtree Securities was founded twenty years ago by current president Jake Taylor as a regional brokerage house in Atlanta, Georgia. The firm expanded personal brokerage services to investors through the sales of individual stocks and bonds. While the number of customer visits to the Peachtree office continues to grow, Taylor has realized that the number of transactions per customer has decreased. This is due to an increase in the purchases of mutual funds by his customers, rather than individual stocks and bonds. In an effort to improve sales growth, five years ago Peachtree Securities began to offer multiple portfolio services. Due to the demographics of its trust customer base, Peachtree Securities is focusing on retirees interested in receiving current income rather than capital gains. To accommodate these investors, electric utilities are a large component of Peachtree Securities’ stock portfolios due to their historically high dividends.

The electric utility industry has been highly regulated by the government based on the price and quality of services provided. While electric utility companies are granted monopolies, the government regulation prevents them from abusing the monopolistic power by forcing them to charge perfectly competitive prices. Electric utility companies have seen a lot of volatility throughout the years. In the 1950’s and 60’s technology advances and economies of scale played a large role in the overall success of the electric utility industry. Inflation and increasing oil prices in the 1970’s contributed to the rapidly increasing operating costs for electric companies. In the 1980’s, gas and oil prices experienced a significant decrease.

Recently, utility companies have moved in the direction of diversification and deregulation. With regards to diversification, many utility companies are considering expansion into nonregulated industries. This move would allow firms to reduce financial risks associated with the regulated businesses, while still allowing for large returns. Such diversification is experienced through the formation of holding companies that control both regulated and nonregulated businesses. Despite the advantages of diversification,